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Launching the U.S. Terror War: the CIA, 9/11, Afghanistan, and Central Asia

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Global Research 3/16/12



On September 11, 2011, within hours of the murderous 9/11 attacks, Bush, Rumsfeld, and Cheney had committed America to what they later called the War on Terror. It should more properly, I believe, be called the Terror War, one in which terror has been directed repeatedly against civilians by all participants, both states and non-state actors.1 It should also be seen as part of a larger, indeed global, process in which terror has been used against civilians in interrelated campaigns by all major powers, including China in Xinjiang and Russia in Chechnya, as well as the United States.2 Terror war in its global context should perhaps be seen as the latest stage of the age-long secular spread of transurban civilization into areas of mostly rural resistance -- areas where conventional forms of warfare, for either geographic or cultural reasons, prove inconclusive.

Terror War was formally declared by George W. Bush on the evening of September 11, 2001, with his statement to the American nation that "we will make no distinction between the terrorists who committed these acts and those who harbor them."3 But the notion that Bushs terror war was in pursuit of actual terrorists lost credibility in 2003, when it was applied to Saddam Husseins Iraq, a country known to have been targeted by terrorists but not to have harbored them.4 It lost still more credibility with the 2005 publication in Britain of the so-called Downing Street memo, in which the head of the British intelligence service MI6 reported after a visit to Washington in 2002 that "Bush wanted to remove Saddam Hussein, through military action, justified by the conjunction of terrorism and WMD. But the intelligence and facts were being fixed around the policy."5 False stories followed in due course linking Iraq to WMD, anthrax, and Niger yellowcake (uranium).

This essay will demonstrate that before 9/11 a small element inside the CIAs Bin Laden Unit and related agencies, the so-called Alec Station Group, were also busy, fixing intelligence by suppressing it, in a way which, accidentally or deliberately, enabled the Terror War. They did so by withholding evidence from the FBI before 9/11 about two of the eventual alleged hijackers on 9/11, Khalid Al-Mihdhar and Nawaf al-Hazmi, thus ensuring that the FBI could not surveil the two men or their colleagues.

This failure to share was recognized in the 9/11 Commission Report, but treated as an accident that might not have occurred if more resources had been applied.6 This explanation, however, has since been refuted by 9/11 Commission Chairman Tom Kean. Asked recently by two filmmakers if the failure to deal appropriately with al-Mihdhar and al-Hazmi could have been a simple mistake, Kean replied:

Oh, it wasnt careless oversight. It was purposeful. No question about that .… The conclusion that we came to was that in the DNA of these organizations was secrecy. And secrecy to the point of ya dont share it with anybody.7

In 2011 an important book by Kevin Fenton, Disconnecting the Dots, demonstrated conclusively that the withholding was purposive, and sustained over a period of eighteen months.8 This interference and manipulation became particularly blatant and controversial in the days before 9/11; it led one FBI agent, Steve Bongardt, to predict accurately on August 29, less than two weeks before 9/11, that someday someone will die.9

As will be seen, the motives for this withholding remain inscrutable. At one time I was satisfied with Lawrence Wrights speculations that the CIA may have wanted to recruit the two Saudis; and that The CIA may also have been protecting an overseas operation [possibly in conjunction with Saudi Arabia] and was afraid that the F.B.I. would expose it.10 The purpose of this essay is to suggest that the motives for the withholding may have had to do with the much larger neocon objective being imposed on American foreign policy at this same time: the consolidation of U.S. global hegemony by the establishment of U.S. forward-based bases around the oil fields of Central Asia.

In short, the withholding of evidence should be seen as part of the larger ominous pattern of the time, including the malperformance of the U.S. government (USG) in response to the 9/11 attacks, and the murderous anthrax letters which helped secure the passage of the Patriot Act.

I am now persuaded by Fenton that Lawrence Wrights explanation, that the CIA was protecting a covert operation, may explain the beginnings of the withholding in January 2000, but cannot explain its renewal in the days just before 9/11. Fenton analyzes a list of thirty-five different occasions where the two alleged hijackers were protected in this fashion, from January 2000 to about September 5, 2001, less than a week before the hijackings.11 We shall see that in his analysis, the incidents fall into two main groups. The motive he attributes to the earlier ones, was to cover a CIA operation that was already in progress.12 However after the system was blinking red in the summer of 2001, and the CIA expected an imminent attack, Fenton can see no other explanation than that the purpose of withholding the information had become to allow the attacks to go forward.13

Fentons second sentence would imply that a homicidal crime was committed by members of the Alec Station group, even if the crime was one of manslaughter (unintended homicide) rather than deliberate and premeditated murder. One can imagine benign reasons for withholding the information: for example, the CIA may have been tolerating the behavior of the two Saudis in order to track down their associates. In this case, we would be dealing with no more than a miscalculation albeit a homicidal miscalculation.

The Terror War and the Rumsfeld-Cheney-Wolfowitz Project of Global Dominion

But in the course of this essay I shall dwell on the activities of the head of the CIAs Bin Laden Unit, Richard Blee, in Uzbekistan as well as Afghanistan. Uzbekistan was an area of concern not only to Blee and his superior Cofer Black; it was also in an area of major interest to Richard Cheney, whose corporation Halliburton had been active since 1997 or earlier in developing the petroleum reserves of Central Asia. Cheney himself said in a speech to oil industrialists in 1998, "I cannot think of a time when we have had a region emerge as suddenly to become as strategically significant as the Caspian.14

I shall suggest that the purpose as well as the result of protecting the two Saudis may have been to fulfill the objectives of Cheney, Rumsfeld, and the Project for the New American Century (PNAC) neocon group for establishing forward-based forces in Central Asia.15 We shall see that a phone call on 9/11 from CIA Director Tenet to Stephen Cambone, a key PNAC figure in the Pentagon, apparently transmitted some of the privileged information that never reached the FBI.

This neocon agenda was partially to maintain American and Israeli domination of the region for security purposes, and (as we shall see) to create the conditions for future unilateral preemptive actions against unfriendly states like Iraq. In particular it was designed to establish new secure bases in the Middle East, anticipating Donald Rumsfelds predictable announcement in 2003 that the U.S. would pull virtually all of its troops, except some training personnel, out of Saudi Arabia.16 But it was partly also to strengthen American influence in particular over the newly liberated states of Central Asia, with their sizable unproven oil and gas reserves.

Fentons alarming conclusion about CIA actions leading up to the 9/11 attacks makes more sense in the context of this agenda, and also in the context of three other revealing anomalies about Bushs Terror War. The first is the paradox that this supposed pursuit of al-Qaeda was conducted in alliance with the two nations, Saudi Arabia and Pakistan, that were most actively supporting Al Qaeda in other parts of the world. In this essay we shall see U.S. and Saudi intelligence cooperating in such a way as to protect, rather than neutralize, Saudi agents in al Qaeda.

The second anomaly is that although the CIA may have been focused on crushing al Qaeda, Rumsfeld and Cheney were intent from the outset on a much wider war. In September 2001 there was no intelligence on 9/11 linking the attacks to Iraq, yet Defense Secretary Donald Rumsfeld, supported by his deputy Paul Wolfowitz, was already observing on September 12 that there were no decent targets for bombing in Afghanistan and that we should consider bombing Iraq, which, he said, had better targets.17 Rumsfelds argument was supported by a Defense Department paper prepared for the ensuing Camp David meetings of September 15-16, which proposed that the immediate priority targets for initial action should be al Qaeda, the Taliban, and Iraq.18

Iraq had been a target for Rumsfeld and Wolfowitz since at least 1998, when the two men co-signed a PNAC letter to President Clinton, calling for the removal of Saddam Husseins regime from power.19 But Iraq was not the only target in the Cheney-Rumsfeld-Wolfowitz agenda, which since at least 1992 had been nothing less than global U.S. dominance, or what former U.S. Colonel Andrew Bacevich called permanent American global hegemony.20 It was a high priority for the neocons. Even before Bush had been elected by the Supreme Court in December 2000, Cheney was at work securing key posts for the 1998 letters cosigners (including Richard Armitage, John Bolton, Richard Perle, along with other PNAC personnel like Stephen Cambone) in the White House, State, and Defense.

The terror war from its outset was designed as an instrument to implement this objective. National Security Adviser Condoleezza Rice on September 24 raised the issue of state sponsorship of terrorism: What is our strategy with respect to countries that support terrorism like Iran, Iraq, Libya, Syria, and Sudan?21 In his memoir, General Wesley Clark reports that the question had evolved by November into a Pentagon five-year plan:

As I went back through the Pentagon in November 2001, one of the senior military staff officers had time for a chat. Yes, we were still on track for going against Iraq, he said. But there was more. This was being discussed as part of a five-year campaign plan, he said, and there were a total of seven countries, beginning with Iraq, then Syria, Lebanon, Libya, Iran, Somalia and Sudan.22

At about this time, former CIA officer Reuel Marc Gerecht published an article in The Weekly Standard about the need for a change of regime in Iran and Syria.23 (Gerecht continues to warn in The Weekly Standard about the menace of both nations today.)

In the Clinton era Gerecht, like Cheney and Rumsfeld, had been part of the Project for the New American Century, a hawkish group calling both for action against Iraq in particular and also more generally for an expanded defense budget that would increase defense spending significantly in the cause of American leadership. The PNAC report of September 2000 Rebuilding Americas Defenses had much to say about Gulf oil and the importance of retaining and strengthening forward-based forces in the region.24

It is relevant that by the end of 2001, in the wake of 9/11 and the Terror War, the United States had already established new bases in Uzbekistan, Tajikistan, and Kyrgyzstan, and was thus better positioned to influence the behavior of the newly liberated governments in the huge oil and gas region east of the Caspian. In the course of this essay we shall see that the agreement to use the first and one of the most important of these bases, Karshi-Khanabad or K-2 in Uzbekistan, grew out of an earlier CIA liaison agreement negotiated in 1999 by Richard Blee of the Alec Station Group, a central figure in this essay. Most Americans are unaware that on 9/11 U.S. Special Forces were already at K-2 on an Uzbek training mission, and that by September 22, two weeks before a formal U.S.-Uzbek military agreement, the CIA was already flying its teams into the massive Karshi-Khanabad, or K2, air base in southern Uzbekistan, where U.S. army engineers were repairing the runway.25

Map showing US bases including Karshi-Khanabad

A third anomaly is that the Terror War led to a dramatic increase in the resort to terror, and even torture, by America itself, including against its own citizens. In this context it is relevant that Cheney and Rumsfeld, through their participation in the Defense Departments super-secret Doomsday Project, had also been part of Continuity of Government (COG) planning for undermining the U.S. Bill of Rights by the warrantless surveillance and detention of dissenters.26 These plans, dating back to the fear of Communists in the McCarthyite 1950s, have been the underpinnings for the elaborate plans in the Pentagon and elsewhere for dealing with antiwar protests against the Pentagons plans for global domination.

As I have argued elsewhere, the U.S. is now spending billions every year on Homeland Security in no small part because of the belief, articulated by Marine Colonel Oliver North, that the Vietnam War was lost in the streets of America, and that this deterrent to U.S. military operations needed to be dealt with.27 Cheney and Rumsfeld, as part of the so-called Doomsday Project for Continuity of Government (COG) planning, had been part of this effort also.28 In short, 9/11 fulfilled agendas long contemplated by a small group of officials for radical new policies both in Central Asia and also inside America.

The homicidal crime suggested by Fentons meticulous research is one both difficult and painful to contemplate. America is in a crisis today because of the activities of the Banks Too Big to Fail, which, as has been pointed out, were also Banks Too Big to Jail for to punish them as criminals would endanger Americas already threatened financial structure.29 This essay, though detailed, is dealing with something analogous, what may have been a Crime Too Big to Punish.

9/11, as will be developed in this essay, has other points in common with the John F. Kennedy assassination.

The Cover-Up of 9/11 and of the CIAs Role in Letting It Happen

After ten years it is important to reassess what we know and do not know about the events that culminated in 9/11, particularly the actions of the CIA and the FBI and the denial of critical information to the 9/11 Commission.

Today, we can confidently say:

1) the most important truths still remain unknown, in large part because many of the most important documents are still either unreleased or heavily redacted;

2) the efforts at cover-up continue, if anything more aggressively than before;

3) In addition to the cover-up, there has been what former 9/11 Commission staffer John Farmer has called either unprecedented administrative incompetence or organized mendacity on the part of key figures in Washington.30 These figures include President Bush, Vice-President Cheney, NORAD General Richard Myers, and CIA Director George Tenet. They include also President Clintons National Security Advisor, Samuel Berger, who prior to testifying on these matters, went to the National Archives and removed, and presumably destroyed, key relevant documents.31 In his book, Farmer has in effect endorsed both of these alternatives.

President Bush awarding National Medal of Honor to George Tenet, Dec. 14, 200

Farmers first alternative, of unprecedented administrative incompetence, is in effect the explanation offered by the 9/11 Commission Report, to deal with 1) striking anomalies both on 9/11 itself, and 2) the preceding twenty months during which important information was withheld from the FBI by key personnel in the CIAs Bin Laden Unit (the so-called Alec Station). But thanks to the groundbreaking new book by Kevin Fenton, Disconnecting the Dots, we can no longer attribute the anomalous CIA behavior to systemic problems, or what Tony Summers rashly calls bureaucratic confusion.32

Building on earlier important books by James Bamford, Lawrence Wright, Peter Lance, and Philip Shenon, Fenton demonstrates beyond a shadow of a doubt that there was a systematic CIA pattern of withholding important information from the FBI, even when the FBI would normally be entitled to it. Even more brilliantly, he shows that the withholding pattern has been systematically sustained through four successive post-9/11 investigations: those of the Congressional Inquiry chaired by Senators Bob Graham and Richard Shelby (still partly withheld), the 9/11 Commission, the Department of Justice inspector general, and the CIA inspector general.

Most importantly of all, he shows that the numerous withholdings, both pre- and post 9/11, were the work of relatively few people. The withholding of information from the FBI was principally the work of the so-called Alec Station group a group within but not identical with the CIAs Osama Bin Laden Unit or Alec Station, consisting largely of CIA personnel, though including a few FBI as well. Key figures in this group were CIA officer Tom Wilshire (discussed in the 9/11 Commission Report as John), and his immediate superior at Alec Station, Richard Blee.

The post-9/11 cover-up of Wilshires behavior was principally the work of one person, Barbara Grewe, who worked first on the Justice Department Inspector Generals investigation of Wilshires behavior, then was transferred to two successive positions with the 9/11 Commissions staff, where, under the leadership of Executive Director Philip Zelikow, she was able to transfer the focus of investigative attention from the performance of the CIA to that of the FBI.33 Whether or not Grewe conducted the interviews of Wilshire and other relevant personnel, she certainly drew on them when drafting her sections of the Commissions and Justice Department inspector generals reports.34

Grewes repositioning from post to post is a sign of an intended cover-up at a higher level. So, as we shall see, is Wilshires transfer in May 2001 from CIAs Alec Station (the Osama Bin Laden Unit) to the FBI, where he began a new phase of interference with the normal flow of intelligence, obstructing the FBI from within it.35

The pattern begins with intelligence obtained from surveillance of an important al Qaeda summit meeting of January 2000 in Malaysia, perhaps the only such summit before 9/11. The meeting drew instant and high-level US attention because of indirect links to a support element (a key telephone in Yemen used by al Qaeda) suspected of acting as a communications center in the 1998 bombings of US Embassies. As Fenton notes, The CIA realized that the summit was so important that information about it was briefed to CIA and FBI leaders [Louis Freeh and Dale Watson], National Security Adviser Samuel Berger and other top officials.36

Yet inside Alec Station Tom Wilshire and his CIA subordinate (known only as Michelle)37 blocked the effort of an FBI agent detailed there (Doug Miller) to notify the FBI that one of the participants (Khalid Al-Mihdhar) had a US visa in his passport.38 Worse, Michelle then sent a cable to other CIA stations falsely stating that Al-Mihdhars travel documents, including a multiple entry US visa, had been copied and passed to the FBI for further investigation.39 Alec Station also failed to watchlist the participants in the meeting, as was called for by CIA guidelines.40

This was just the beginning of a systematic, sometimes lying pattern, where NSA and CIA information about Al-Mihdhar and his traveling companion, Nawaf al-Hazmi, was systematically withheld from the FBI, lied about, or manipulated or distorted in such a way as to inhibit an FBI investigation of the two Saudis and their associates. This is a major component of the 9/11 story; because the behavior of these two would-be hijackers was so unprofessional that, without this CIA protection provided by the Alec Station Group, they would almost certainly have been detected and detained or deported, long before they prepared to board Flight 77 in Washington.41

Fenton concludes with a list of thirty-five different occasions where the two alleged hijackers were protected in this fashion, from January 2000 to about September 5, 2001, less than a week before the hijackings. In his analysis, the incidents fall into two main groups. The motive he attributes to the earlier ones, such as the blocking of Doug Millers cable, was to cover a CIA operation that was already in progress.43 However after the system was blinking red in the summer of 2001, and the CIA expected an imminent attack, Fenton can see no other plausible explanation than that the purpose of withholding the information had become to allow the attacks to go forward.44

Wilshires pattern of interference changed markedly after his move to the Bureau. When in CIA he had moved to block transmittal of intelligence to the FBI. Now, in contrast, he initiated FBI reviews of the same material, but in such a way that the reviews were conducted in too leisurely a fashion to bear fruit before 9/11. Fenton suspects that Wilshire anticipated a future review of his files; and was laying a false trail of documentation to neutralize his embarrassing earlier performance.45

I believe we must now accept Fentons finding of fact: It is clear that this information was not withheld through a series of bizarre accidents, but intentionally.46 However, I suggest a different explanation as to what those intentions originally were, one which is superficially much simpler, more benign, and also more explicative of other parts, apparently unrelated, of the 9/11 mystery.

The Liaison Agreements with Other Intelligence Agencies

Initially, I believe, Al-Mihdhar and Al-Hazmi may have been protected because they had been sent to America by the Saudi GID intelligence service, which would explain why after their arrival they were apparently bankrolled indirectly by the Saudi embassy in Washington. The facts are well summarized by Paul Church in Asia Times Online (February 11, 2012):

etween 1998 and 2002, up to US$73,000 in cashier cheques was funneled by [saudi Ambassador Prince] Bandar's wife Haifa - who once described the elder Bushes as like "my mother and father" - to two Californian families known to have bankrolled al-Midhar and al-Hazmi. … Princess Haifa sent regular monthly payments of between $2,000 and $3,500 to Majeda Dweikat, wife of Osama Basnan, believed by various investigators to be a spy for the Saudi government. Many of the cheques were signed over to Manal Bajadr, wife of Omar al-Bayoumi, himself suspected of covertly working for the kingdom. The Basnans, the al-Bayoumis and the two 9/11 hijackers once shared the same apartment block in San Diego. It was al-Bayoumi who greeted the killers when they first arrived in America, and provided them, among other assistance, with an apartment and social security cards. He even helped the men enroll at flight schools in Florida.47

If the two Saudis were in fact sent by the GID, they would almost certainly have been admitted to the U.S. under the terms of the liaison agreement between the GID and the CIA.48 Prince Turki al-Faisal, former head of the GID, has said that he shared his al Qaeda information with the CIA, and that in 1997 the Saudis established a joint intelligence committee with the United States to share information on terrorism in general and on…al Qaeda in particular.49 The 9/11 Commission Report adds that after a post-millennium review, the Counterterrorism Center (which included Alec Station, the Bin Laden Unit) intended to proceed with its plan of half a year earlier, building up the capabilities of foreign security services that provided intelligence via liaison.50

This was a Blee specialty. Steve Coll reports that Richard Blee and his superior Cofer Black, excited about the opportunities presented by liaison arrangements for expanding the scope of CIA reach in critical regions, had flown together into Tashkent in 1999, and negotiated a new liaison agreement with Uzbekistan.51 According to Coll and the Washington Post, this arrangement soon led, via Tashkent, to a CIA liaison inside Afghanistan with the Northern Alliance.52 Thomas Ricks and Susan Glasser reported in the Washington Post that, beginning after the embassy bombings in Dar es Salaam and Nairobi in 1998, The United States and Uzbekistan have quietly conducted joint covert operations aimed at countering Afghanistan's ruling Taliban regime and its terrorist allies …, according to officials from both nations."53

Panjashir valley, area of Northern Alliance dominance

Speaking as a former junior diplomat, let me observe that a liaison arrangement would probably have required special access clearances for those privy to the arrangement and sharing the liaison information.54 This would explain the exclusion of the FBI agents who were not cleared for this information, as well as the behavior of other non-cleared CIA agents who proceeded to collect and disseminate information about the two alleged hijackers. Alec Station needed both to protect the double identity of the two Saudis, and to make sure that they were not embarrassingly detained by the FBI.

Almost certainly the CIA had relevant liaison arrangements, not just with the Saudi GID and Uzbekistan, but also with the Inter-Services Intelligence (ISI) of Pakistan, as well as the intelligence services of Egypt, and perhaps Yemen and Morocco. In particular there is reason to think that Ali Mohamed, a double agent who was protected by the FBI from being detained in Canada, thus allowing him to help organize the al Qaeda embassy bombings of 1998, was permitted under such arrangements to enter the US as an agent of foreign intelligence, probably Egyptian.55 Ali Mohamed figures both in the content and as source of the Presidents Daily Brief (PDB) of August 6, 2001, in which the CIA warned the president, Bin Ladin Determined to Strike in US.56 According to Mohameds FBI handler, Jack Cloonan, all that information came from Ali, while the PDB itself attributes its key finding to what an Egyptian Islamic Jihad (EIJ) operative told an [---] service.57 (Ali Mohamed was definitely EIJ, and this service was probably Egyptian.)

Ali Mohamed

But when Mohamed, like Al-Mihdhar and Al-Hazmi, was inappropriately admitted to the US, it was reportedly not by the CIA, but possibly by some other Federal agency.58 This was very possibly a Pentagon agency, because from 1987 to 1989, Ali Mohamed was assigned to the U.S. [Army] Special Operations Command [sOCOM] in Fort Bragg, the home of the Green Berets and the Delta Force, the elite counterterrorism squad.59 SOCOM, which includes JSOC (the Joint Special Operations Command), has its own intelligence division;60 and SOCOM is the command that first mounted the Able Danger program in 1999 to track al Qaeda operatives, and then, inexplicably, both shut it down before 9/11 and destroyed its database.61 In addition SOCOM was working in Uzbekistan with CIA operatives as a result of the liaison agreement negotiated by Cofer Black and Richard Blee of the CTC.

Cofer Black

For this and other reasons, I suggest reconceptualizing what Fenton calls the anomalous Alec Station group as an inter-agency liaison team (or teams) with special access clearances, including Alec Station personnel, collaborating personnel in the FBI, and possibly SOCOM. (One of these collaborators was FBI agent Dina Corsi, who according to Fenton withheld vital information from fellow agent Steve Bongardt even after the NSA had cleared it for him.)62

Background: the Safari Club and William Casey

These arrangements can be traced in one form or another, at least back to the 1970s. Then senior CIA officers and ex-officers (notably Richard Helms), who were dissatisfied with the CIA cutbacks instituted under Jimmy Carters CIA director, Stansfield Turner, organized an alternative network, the so-called Safari Club. Subordinated to intelligence chiefs from France, Egypt, Saudi Arabia, Morocco and (under the Shah) Iran, the Safari Club provided a home to CIA officers like Theodore Shackley and Thomas Clines, who had been marginalized or fired by CIA Director Turner. As Prince Turki later explained, the purpose of the Safari Club was not just to exchange information, but to conduct covert operations that the CIA could no longer carry out directly in the wake of the Watergate scandal and subsequent reforms.63

In the 1980s, CIA Director William Casey made key decisions in the conduct of the Afghan covert war, not through his own CIA bureaucracy but with the Saudi intelligence chiefs, first Kamal Adham and then Prince Turki. Among these decisions was the creation of a foreign legion to assist the Afghan mujahideen in their war against the Soviets in other words, the creation of that support network which, since the end of that war, we have known as Al Qaeda.64 Casey worked out the details with the two Saudi intelligence chiefs, and also with the head of the Bank of Credit and Commerce International (BCCI), the Saudi-Pakistani bank in which Adham and Turki were both shareholders.

In so doing, Casey was in effect running a second or back-channel CIA, building up the future al Qaeda in Pakistan with the Saudis, even though the official CIA hierarchy underneath him in Langley rightly thought this unwise.65 In American War Machine, I situated the Safari Club and BCCI in a succession of second CIA or alternative CIA arrangements dating back to the creation of the Office of Policy Coordination (OPC) in 1948. Thus it is relevant that CIA Director George Tenet, following Caseys precedent, met with Saudi Ambassador Bandar around once a month, and would not tell CIA officers handling Saudi issues what he had discussed.66

Fenton himself invokes the example of the Safari Club in proposing the possible explanation that Blee and Wilshire used a parallel network to track Al-Mihdhar and Al-Hazmi inside the United States. In his words, Withholding the information about Almihdhar and Alhazmi only makes sense if the CIA was monitoring the two men in the US itself, either officially or off the books.67 But a third option would be that the GID was monitoring their movements, a situation quite compatible with Saudi Prince Bandars claim that Saudi security had been actively following the movements of most of the terrorists with precision.68

Joseph and Susan Trento heard from a former CIA officer, once based in Saudi Arabia, that Both Hazmi and Mihdhar were Saudi agents.69 If so, they were clearly double agents, acting (or posing) as terrorists at the same time they were acting (or posing) as informants. In espionage, double agents are prized and often valuable; but to rely on them (as the example of Ali Mohamed illustrates) can also be dangerous.

This was particularly the case for the CIA with respect to Saudi Arabia, whose GID supported Al Qaeda energetically in countries like Bosnia, in exchange for a pledge (negotiated by Saudi Interior Minister Naif bin Abdul Aziz with Osama bin Laden) that Al Qaeda would not interfere with the politics of Saudi Arabia or any Arab country.70 Pakistans ISI was even more actively engaged with al Qaeda, and some elements of ISI were probably closer to the ideological goals of al Qaeda, than to Pakistans nominally secular government.

But in all cases the handling of illegal informants is not just dangerous and unpredictable, but corrupting. To act their parts, the informants must break the law; and their handlers, knowing this, must protect them by failing to report them, and then, all too often, intercede to prevent their arrest by others. In this way, handlers, over and over again, become complicit in the crimes of their informants.71

Even in the best of circumstances, decisions have to be made whether to allow an informants crime to go forward, or to thwart it and risk terminating the usefulness of the informant. In such moments, agencies are all too likely to make the choice that is not in the public interest.

A very relevant example is the first World Trade Center bombing of 1993 relevant because Khalid Sheikh Mohammed, the alleged mastermind of 9/11, was one of the 1993 plotters as well. The FBI had an informant, Emad Salem, among the 1993 plotters; and Salem later claimed, with supporting evidence from tapes of his FBI debriefings, that the FBI deliberately chose not to shut down the plot. Here is Ralph Blumenthals careful account in the New York Times of this precursor to the mystery of 9/11:

Law-enforcement officials [i.e. the FBI] were told that terrorists were building a bomb that was eventually used to blow up the World Trade Center, and they planned to thwart the plotters by secretly substituting harmless powder for the explosives, an informer said after the blast.

The informer was to have helped the plotters build the bomb and supply the fake powder, but the plan was called off by an F.B.I. supervisor who had other ideas about how the informer, Emad A. Salem, should be used, the informer said.

The account, which is given in the transcript of hundreds of hours of tape recordings Mr. Salem secretly made of his talks with law-enforcement agents, portrays the authorities as in a far better position than previously known to foil the Feb. 26 bombing of New York City's tallest towers. The explosion left six people dead, more than 1,000 injured and damages in excess of half a billion dollars. Four men are now on trial in Manhattan Federal Court in that attack.72

What makes the 1993 plot even more relevant is that Salem, according to many sources, was an agent of the Egyptian intelligence service, sent to America to spy on the actions of the Egyptian Blind Sheikh Omar Abdel Rahman.73 This raises the possibility that the F.B.I. supervisor who had other ideas about how to use Emad Salem, was a member of a liaison team, with special knowledge he could not share with other FBI agents. It may have been, for example, that the Egyptian intelligence service declined to let Salems cover be blown. This suggestion is both speculative and problematic, but it has the advantage of offering a relatively coherent explanation for otherwise baffling behavior.

This explanation does not at all rule out the possibility that some officials had more sinister motives for allowing the bombing to take place and covering it up afterwards. Sheikh Omar Abdel Rahman was at this very time a key figure in a sensitive Saudi program, signed on to by U.S. officials as well, to supply mujahideen warriors in Bosnia against Serbia (including some, like Ayman al-Zawahiri, who were later accused of the 9/11 plot).74 It is clear from both investigative and prosecutorial behavior that a number of different US agencies did not want to disturb Rahmans activities. Even after Rahman himself was finally indicted in the 1995 conspiracy case to blow up New York landmarks, the US Government continued to protect Ali Mohamed, a key figure in the conspiracy.

Worse, the performance of the FBI in allowing the bombing to proceed was only one of a series of interrelated bungled performances and missed opportunities, climaxing with 9/11. The first was in connection with the murder in New York of the Jewish extremist Meir Kahane. The FBI and NY police actually detained two of the murderers in that case and then released them, allowing them to take part in the WTC bombing of 1993. A key trainer of the two men was Ali Mohamed while still in U.S. Special Forces, whose name was systematically protected from disclosure by the prosecuting attorney, Patrick Fitzgerald. Then in 1994, when Ali Mohamed was detained in Vancouver by the Canadian RCMP, the FBI intervened to arrange for his release. This freed Mohamed to proceed to Kenya, where he became the lead organizer of the 1998 US Embassy bombing in Nairobi.75

Ali Mohamed was finally detained by the Americans in 1998, but still not imprisoned. He was apparently still a free man when he readily confessed to his FBI handler, Jack Cloonan, that he not only knew at least three of the 9/11 alleged hijackers, but had helped instruct them in how to hijack airplanes.76 According to Ali Soufan, released in September 2011, Ali Mohamed was still awaiting sentencing in 2011, twelve years after his guilty plea in May 1999.77

We have to conclude that there is something profoundly dysfunctional going on here, and has been going on since before 9/11, indeed under both political parties. The conditions of secrecy created by special clearances have not just masked this dysfunctionality; they have, I would argue, helped create it. The history of espionage demonstrates that secret power, when operating in the sphere of illegal activities, becomes, time after time, antithetical to public democratic power.78 The more restricted the group of special planners with special clearances, the less likely are their decisions to conform with the dictates of international and domestic law, still less with common morality and common sense.

Add to these conditions of unwholesome secrecy the fundamentally unhealthy, indeed corrupt, relationship of U.S. intelligence agencies to those of Saudi Arabia and Pakistan. This has been profoundly anti-democratic both at home and in Asia. The US dependency on Saudi oil has in effect subsidized a wealth-generated spread of Islamic fundamentalism throughout the world, while what the 99.9 percent of ordinary Americans pay for oil and gas generates huge sums, which Saudis then recycle into the financial institutions of the one tenth of one percent at the pinnacle of Wall Street.

In like manner, Americas fraught relationship with the ISI of Pakistan has resulted in a dramatic increase in international heroin trafficking by the two agencies Afghan clients.79 In short the bureaucratic dysfunction we are talking about in 9/11 is a symptom of a larger dysfunction in Americas relationship with Saudi Arabia, with Pakistan, and through them with the rest of the world.

Liaison Agreements and the Protection of Al-Mihdhar and Al-Hazmi

Even without the suggestive precedent of the 1993 WTC bombing, it is legitimate to posit that liaison agreements may have inhibited the roundup of Khalid Al-Mihdhar and Nawaf Al-Hazmi. Let us consider first Fentons finding of fact: It is clear that this information [about the two men] was not withheld through a series of bizarre accidents, but intentionally.80 This finding I consider rock hard. But we cannot be so coinfident about his explanation: that the purpose of withholding the information had become to allow the attacks to go forward.81

I believe that in fact there are a number of possibilities about the intention, ranging from the relatively innocent (the inhibitions deriving from a liaison agreement) to the nefarious. Before considering these, let us deconstruct the notion of letting the attacks go forward. Clearly, if the alleged hijackers were not detained at the airport gates, people would probably have been killed but how many? Recall that in the Operation Northwoods documents, which envisaged planning false flag attacks to justify a U.S. military intervention in Cuba, the Joint Chiefs wrote We could develop a Communist Cuban terror campaign in which We could sink a boatload of Cubans.82 Would the loss of four planeloads of passengers have been a qualitatively different tragedy?

Of course 9/11 became a much greater tragedy when three of the planes hit the two Towers and the Pentagon. But it is possible that the liaison minders of the two Saudis did not imagine that their targets were capable of such a feat. Recall that their flying lessons, even in a Cessna, were such a fiasco that the lessons were quickly terminated. Their instructor told them that flying was simply not for them.83

Let me suggest that there are three separable ingredients to the 9/11 attacks: the hijackings, the strikes on the buildings, and the astonishing collapse of the three WTC buildings. It is at least possible that the Alec Station liaison team, as a group, contemplated only the first stage, without ever imagining the two stages that ensued.

A minimal, least malign initial explanation for the withholding of information about two of the alleged hijackers would be the hypothesis I proposed in the case of Emad Salem the restricted access created by the special clearance for a liaison agreement. But just as in 1993, the secret power created behind the wall of restrictive clearances may have been exploited for ulterior purposes. The dangerous situation thus created of potential would-be-hijackers being protected from detention at a time of expected attack may have inspired some to exploit the resulting conditions of secrecy as an opportunity to plan an incident to justify war. One important analogy with the 1964 false Second Tonkin Gulf Incident that was used to justify attacking North Vietnam is the same presence of a powerful faction in 2001 the PNAC clique inside government that was bent on unilateral military action.84

One clue to this more sinister intention is that the pattern of withholdings detailed by Fenton is not restricted exclusively to the two Saudis and their CIA station handlers. There are a few concatenating withholdings by other agencies above all the Able Danger info that was destroyed at SOCOM and the withholding apparently by NSA -- of an important relevant intercept, apparently about the alleged hijackers and Moussaoui.85

If the NSA was withholding information from relevant officials, it would recall the role of the NSA at the time of the second Tonkin Gulf Incident in August 1964. Then the NSA, at a crucial moment, forwarded 15 pieces of SIGINT (signals intelligence) which indicated falsely that there had been a North Vietnamese attack on two US destroyers. At the same time NSA withheld 107 pieces of SIGINT which indicated correctly that no North Vietnamese attack had occurred.86 NSAs behavior at that time was mirrored at the CIA: both agencies were aware of a powerful consensus inside the Johnson administration that had already agreed on provoking North Vietnam, in hopes of creating an opportunity for military response.87

We know from many accounts of the Bush administration that there was also a powerful pro-war consensus within it, centered on Cheney, Rumsfeld, and the so-called cabal of PNAC (the Project for the New American Century) that before Bushs election had been lobbying vigorously for military action against Iraq. We know also that Rumsfelds immediate response to 9/11 was to propose an attack on Iraq, and that planning for such an attack was indeed instituted on September 17.88 It is worth considering whether some of those protecting the alleged hijackers from detention did not share these warlike ambitions.89

Did Richard Blee Have an Ulterior Motive for Withholding Information?

Fenton speculates that one of those seeking a pretext for an escalated war against Al Qaeda may have been Richard Blee. We saw that Blee, with Cofer Black, negotiated an intelligence-sharing liaison agreement with Uzbekistan. By 2000 SOCOM had become involved, and U.S. Special Forces began to work more overtly with the Uzbek military on training missions.90 In the course of time the Uzbek liaison agreement, as we saw, expanded into a subordinate liaison with the Northern Alliance in Afghanistan. Blee, meeting with Massoud in October 1999, agreed to lobby in Washington for more active support for the Northern Alliance.91

After the USS Cole bombing in Aden in 2000, Blee was pushing to expand the Uzbek military mission still further into a joint attack force in conjunction with the Northern Alliance forces of Massoud. There was considerable objection to this while Clinton was still president, partly on the grounds that Massoud was fighting Pakistani-backed Taliban forces with Russian and Iranian support, and partly because he was known to be supporting his forces by heroin trafficking.92 But in the spring of 2001 a meeting of department deputies in the new Bush administration revived the plans of Blee and Black, (supported by Counterterrorism chief Richard Clarke) for large-scale covert aid to Massoud.93 On September 4, one week before 9/11, the Bush Cabinet authorized the drafting of a new presidential directive, NSPD-9, authorizing a covert action program along these lines in conjunction with Massoud.94

In the new Bush administration Blee was no longer a minority voice, and six weeks after 9/11 he would be named the new CIA station chief in Kabul.95 Fenton reports that in this capacity Blee became involved in the rendition of al Qaeda detainees, and suggests that the motive may have been to obtain, by torture, a false confession (by Ibn Shaikh al-Libi) to Iraqi involvement with al Qaeda. This false confession then became part of the fixing of evidence, and formed a key part of Secretary of State Colin Powells embarrassing presentation to the UN to support the invasion of Iraq.96

Did SOCOM Have an Ulterior Motive for Closing Down Able Danger?

What ensued after 9/11 went far beyond Blees program for paramilitary CIA involvement with the Northern Alliance. The CIA component in Afghanistan was soon dwarfed by the forces of SOCOM: George Tenet reported that by late 2001 the US force in Afghanistan consisted of about 500 fighters, including 110 CIA officers, 316 Special Forces personnel, and scores of Joint Special Operations Command raiders creating havoc behind enemy lines.97

In the Bush administration Stephen Cambone, who earlier had collaborated with Rumsfeld and Cheney in signing the PNACs statement, Rebuilding Americas Defenses, became one of the active promoters of using SOCOM special forces to operate covertly against al Qaeda, not just in Afghanistan, but anywhere in the world.98

It is possible that anything Blee may have done in Alec Station to prepare the way for 9/11 was only one part of a larger inter-agency operation, in which an equivalent role was played by SOCOMs shutting down of the Able Danger project. This might help explain a handwritten notation around 10 PM on 9/11 by Stephen Cambone, then one of Cheneys PNAC appointees under Rumsfeld in the Pentagon, after a phone call with George Tenet:

AA 77 - 3 indiv[iduals] have been followed since Millennium & Cole

1 guy is assoc[iate] of Cole bomber

2 entered US in early July

(2 of 3 pulled aside & interrogated?)99

The guy here is probably Al-Mihdhar, and the Cole bomber probably Khallad [or Tawfiq] bin Attash, a major al Qaeda figure connected not just to the Cole bombing but also to the 1998 embassy attacks. One wants to know why Tenet was sharing with a hawk in the Pentagon information that has apparently never been shared by anyone outside the CIA since. And is it a coincidence that Cambone, like Blee, oversaw a program in this case staffed by SOCOM special operations personnel using torture to interrogate detainees in Afghanistan?100

Just as Blee was reportedly a special protégé of George Tenet at CIA, so Cambone was notorious for his fierce loyalty to first Dick Cheney and later Donald Rumsfeld in the Pentagon. It is not known whether he was associated with the Continuity of Government (COG) planning project where Rumsfeld and Cheney, among others, prepared for the warrantless surveillance and detention measures that were (as I have argued elsewhere) implemented beginning on the morning of 9/11 and continuing to today.101 Nor is it known if he was associated in any way with Cheneys Counterterrorism Task Force in the Spring of 2001, which has been alleged to have been a source for the war games, including rogue plane attacks, which added to the disarray of the US response, on 9/11.102

Deep Events as a Repeated Pattern of U.S. Engagement in War

I want to conclude with a little historical perspective on the dysfunction we have been looking at. In a sense 9/11 was unprecedented the greatest mass murder ever committed in one day on U.S. soil. In another sense it represented an example of the kind of signature event with which we have become only too familiar since the Kennedy assassination. I have called these events deep events events deeply rooted in illegal covert activity in various branches of US intelligence and with a predictable accompanying pattern of official cover-ups backed up by amazing media malfunction and dishonest best-selling books. Some of these deep events, like the Kennedy assassination, Tonkin Gulf, and 9/11, should be considered structural deep events, because of their permanent impact on history.

It is striking that these structural deep events the JFK assassination, Tonkin Gulf, and 9/11 should all have been swiftly followed by Americas engagement in ill-considered wars. The reverse is also true: all of Americas significant wars since Korea Laos, Vietnam, Afghanistan (twice, once covertly and now overtly), and Iraq have all been preceded by structural deep events. As I wrote in American War Machine, a J-5 Staff Report of 1963 reported to the Joint Chiefs that The engineering of a series of provocations to justify military intervention is feasible and could be accomplished with the resources available. Tonkin Gulf, 9/11, and even the Kennedy assassination itself can all be seen as events that were indeed engineered, along the guidelines set out in 1962 in the Joint Chiefs of Staff proposals for Project Northwoods.

In two recent books I have been slowly persuaded, against my own initial incredulity, to list more than a dozen significant parallels between the Kennedy assassination and 9/11. Thanks to Kevin Fentons brilliant research, I can list a further analogy. The CIA files on Lee Harvey Oswald, more or less dormant for two years, suddenly became hyperactive in the six weeks before the Kennedy assassination. Fenton has demonstrated a similar burst of activity in FBI files on the two Saudis in the weeks before 9/11 a burst initiated by Tom Wilshire, at a time suspiciously close to when the alleged hijackers settled on a final date for their attack. Then in both cases there were also strange delays, leaving the files open at the time of the deep events.105

The Impact of 9/11 on U.S. and International Law

Throughout this essay we have seen two different and indeed antithetical levels of U.S. foreign policy at work. On the surface level of public diplomacy we see a commitment to international law and the peaceful resolution of differences. On a deeper level, represented by a long-time Saudi connection and covert arrangements to control international oil, we see the toleration and indeed protection of terrorists in fulfillment of both Saudi and American secret goals. We should see the actions in 2000-2001 of the Alec Station group, with respect to the two alleged hijackers al-Mihdhar and al-Hazmi, in the context of this long-time Saudi connection, as well as of the secret consensus in 2001 just as earlier in 1964 that Americas oil and security needs (along with those of Israel) required a new American mobilization for war.

Horrendous as it was, the murder of over 2000 civilians on 9/11 was not the only major crime of that day. 9/11 also initiated a series of on-going onslaughts on both international and domestic U.S. law. Law and freedom go together, and both had been significantly enhanced by the founding documents of the United States in the 18th Century. The world benefited; written constitutions soon appeared on every continent; and the Young Europe movements, inspired by Americas example, began the long difficult process towards todays European Union.

Starting in 2001, both law and freedom have been progressively eroded. International comity, which depends on each state not doing to others what they would not want done to them, has been supplanted, at least for a while, by U.S. unilateral military engagement without constraint, acting without fear of retribution. Drone killings in far corners of the world have now become routine, causing more than an estimated 2000 Pakistani deaths, the vast majority of them untargeted civilians, and over 75 percent of them under President Obama.106 The preemptive war against Iraq, despite being proven both unwarranted and counterproductive, has been followed by the preemptive bombing of Libya, and the prospect of still further campaigns against Syria and Iran.

Writing as a Canadian, let me say that I believe in American exceptionalism, and that at one time America was truly exceptional in its unprecedented replacement of authoritarian with limited constitutional government. Today America is still exceptional, but for its percentage of citizens who are incarcerated, for its disparity in wealth and income between rich and poor (a ratio exceeded among large nations only by China), and for its wanton use of lethal power abroad.

Only the last of these trends began with 9/11. But 9/11 itself should be seen as a dialectical outcome of Americas imperial expansion and simultaneous decay -- a process inevitably afflicting those superstates that amass and retain more power than is necessary for the orderly management of their own affairs.

Peter Dale Scott, a former Canadian diplomat and English Professor at the University of California, Berkeley, is the author of Drugs Oil and War, The Road to 9/11, and The War Conspiracy: JFK, 9/11, and the Deep Politics of War. His most recent book is American War Machine: Deep Politics, the CIA Global Drug Connection and the Road to Afghanistan. His website, which contains a wealth of his writings, is here http://www.peterdalescott.net/q.html. Peter Dale Scott is a Research Associate of the Centre for Research on Globalization (CRG)


1 A shorter version of this paper was presented at the International Hearings on 9/11 at Toronto, September 11, 2011. It can be seen on line at here.

2 But perhaps no single act of terror committed in the last decade, whether by Qaddafi in Libya or Assad in Syria, has surpassed or even come close to the U.S. devastation of the Iraqi city of Fallujah.

3 "Statement by the President in His Address to the Nation, September 11, 2001, here. On September 20, 2001, Bush said in an address to a joint session of congress, "Our 'war on terror' begins with al-Qaeda, but it does not end there. It will not end until every terrorist group of global reach has been found, stopped and defeated."

4 On this point see the National Commission on Terrorist Attacks upon the United States, The 9/11 Commission Report (New York: W.W. Norton, 2004), 66: To date we have seen no evidence that … Iraq cooperated with al Qaeda in developing or carrying out any attacks against the United States.

5 Sunday Times (London), May 1, 2005; Mark Danner, The Secret Way to War: the Downing Street Memo and the Iraq War's buried history (New York: New York Review Books, 2006).

6 9/11 Commission Report, 266-72 (272).

7 Rory OConnor and Ray Nowosielski, Who Is Rich Blee? 911Truth.org, September 21, 2111, here; Rory OConnor and Ray Nowosielski, Insiders voice doubts about CIAs 9/11 story, Salon, October 14, 2111, here. OConnor and Nowosielski add corroboration from former Counterterrorism Chief Richard Clarke. Clarke said he assumed that there was a high-level decision in the CIA ordering people not to share that information. When asked who might have issued such an order, he replied, I would think it would have been made by the director, referring to Tenet although he added that Tenet and others would never admit to the truth today even if you waterboarded them.

8 Kevin Fenton, Disconnecting the Dots (Walterville, OR: TrineDay, 2011).

9 9/11 Commission Report, 259, 271; Lawrence Wright, The Looming Tower: Al-Qaeda and the Road to 9/11 (New York: Knopf, 2006), 35254; Peter Dale Scott, American War Machine (Lanham, MD: Rowman & Littlefield, 2010), 203.

10 Lawrence Wright, The Agent, New Yorker, July 10 and 17, 2006, 68; cf. Wright, Looming Tower, 339-44; discussion in Peter Dale Scott, The War Conspiracy: JFK, 9/11, and the Deep Politics of War (Ipswich MA: Mary Ferrell Foundation Press, 2008), 355, 388-89.

11 Fenton, Disconnecting the Dots, 383-86.

12 Fenton, Disconnecting the Dots, 48. Cf. Lawrence Wright, The Agent, New Yorker, July 10 and 17, 2006, 68; quoted approvingly in Peter Dale Scott, American War Machine, 399.

13 Fenton, Disconnecting the Dots, 371, cf. 95.

14 Lutz Kleverman, The new Great Game, Guardian (London), October 19, 2003, here.

15 Rebuilding America's Defenses: Strategy, Forces and Resources For a New Century: A Report of the Project for the New American Century, September 2000, here, 17, 27.

16 US Pulls out of Saudi Arabia, BBC News, April 29, 2003, here.

17 Richard A. Clarke, Against All Enemies: inside America's war on terror (New York: Free Press, 2004), 31.

18 Bradley Graham, By His Own Rules: The Ambitions, Successes, and Ultimate Failures of Donald Rumsfeld (New York: Public Affairs, 2009), 290.

19 PNAC, Letter to President Clinton on Iraq, January 26, 1998, here.

20 Gary Dorrien, Imperial Designs: Neoconservatism and the New Pax Americana (New York: Routledge, 2004). Bacevich was speaking of a 1992 memo drafted by Wolfowitz for then Defense Secretary Cheney, calling for America to retain the power to act unilaterally. See Lewis D. Solomon, Paul D. Wolfowitz: visionary intellectual, policymaker, and strategist (New York: Praeger, 2007), 52; Andrew Bacevich, American Empire: The Realities and Consequences of U.S. Diplomacy (Cambridge MA: Harvard UP, 2002), 44.

21 Bob Woodward, Bush at War (New York: Simon & Schuster, 2002), 131. Much earlier, on the afternoon of September 11, DOD official Stephen Cambone recorded notes from his conversation with Rumsfeld : Near term target need -- Go massive Sweep it all up thing related and not (here).

22 Wesley Clark, Winning Modern Wars (New York: PublicAffairs, 2003), 130.

23 Nicholas Lemann, The Next World Order, New Yorker, April 1, 2002, here.

24 Rebuilding America's Defenses -- Strategy, Forces and Resources For a New Century: A Report of the Project for the New American Century, September 2000, here, 17, 27.

25 Ahmed Rashid, Descent into chaos: the United States and the failure of nation building in Pakistan, Afghanistan, and Central Asia (New York: Viking, 2008), 70, 69; citing Ahmed Rashid, US Builds Alliances in Central Asia, Far Eastern Economic Review, May 1, 2000: The CIA and the Pentagon had been closely collaborating with the Uzbek army and secret services since 1997, providing training, equipment, and mentoring in the hope of using Uzbek Special Forces to snatch Osama bin Laden from Afghanistan, a fact I discovered on a trip to Washington in 2000.

26 Peter Dale Scott, The Doomsday Project and Deep Events: JFK, Watergate, Iran-Contra, and 9/11, Asia-Pacific Journal: Japan Focus, November 21, 2011, here.

27 Scott, The Road to 9/11: wealth, empire, and the future of America (Berkeley: University of California Press, 2007), 9.

28 Estimates of annual spending on Homeland Security range up to a trillion dollars. See Stephan Salisbury, Weaponizing the Body Politic, TomDispatch.com, March 4, 2012, here.

29 Cf. Simon Johnson, Too Big to Jail, Slate, February 24, 2012, here: The main motivation behind the administrations indulgence of serious criminality evidently is fear of the consequences of taking tough action on individual bankers. And maybe officials are right to be afraid, given the massive size of the banks in question relative to the economy. In fact, those banks are bigger now than they were before the crisis, and, as James Kwak and I documented at length in our book 13 Bankers, they are much larger than they were 20 years ago.

30 John Farmer, The Ground Truth: the untold story of America under attack on 9/11 (New York: Riverhead Books, 2009), 288; quoted in Anthony Summers and Robbyn Swan, The Eleventh Day: the full story of 9/11 and Osama bin Laden (New York: Ballantine, 2011), 147.

31 Summers , 383-84; cf. Farmer, Ground Truth, 41. Although a Democrat, Berger was subsequently protected by the Republican Bush Administration from having to testify to Congress about his behavior (a condition of his plea bargain).

32 Summers, Eleventh Day, 334.

33 Fenton, Disconnecting the Dots, 72-79. Grewe subsequently left government to work at the Mitre Corp., a private firm doing CIA contract work with the CIA and another private firm, Ptech. Questions about Ptech and Mitre Corps work on FAA-NORAD interoperability systems were raised in 9/11 testimony presented some years ago by Indira Singh; see Scott, Road to 9/11, 175.

34 Fenton, Disconnecting the Dots, 78. Kirsten Wilhelm of the National Archives told Fenton,(p. 78) that It appears Barbara Grewe conducted the interviews with John [Wilshire] and Jane [Corsi], another key figure. Wilhelm could find no memorandum for the record (MFR) for the Wilshire interview, which Fenton understandably calls about the most important interview the Commission conducted (p. 79). Summers, also citing correspondence with Kirsten Wilhelm, disagrees, saying that the report of Wilshires interview exists, but is redacted in its entirety (Summers, Eleventh Day, 381, cf. 552). This is an important point to be focused on in future investigations.

35 Fenton, Disconnecting the Dots, 225.

36 Fenton, Disconnecting the Dots, 38; citing 9/11 Commission Report, 181-82.

37 Michelle has since been identified on the Internet, but so far basically by only one source.

38 Fenton, Disconnecting the Dots, 42-45; summarizing Justice Department IG Report, 239-42; cf. Wright, Looming Tower, 311-12.

39 Fenton, Disconnecting the Dots, 50; summarizing Justice Department IG Report, 242-43; cf. Wright, Looming Tower, 311.

40 Fenton, Disconnecting the Dots, 45.

41 I do not know whether in fact they boarded the plane. However I am now satisfied that al-Mihdhar and al-Hazmi acted as if they intended to hijack, as evidenced by their al-Qaeda contacts in Malaysia and elsewhere, their attempts to learn to fly, etc.

42 Fenton, Disconnecting the Dots, 383-86.

43 Fenton, Disconnecting the Dots, 48. Cf. Lawrence Wright, The Agent, New Yorker, July 10 and 17, 2006, 68; quoted approvingly in Peter Dale Scott, American War Machine, 399.

44 Fenton, Disconnecting the Dots, 371, cf. 95.

45 Fenton, Disconnecting the Dots, 239-42, 310-22. Fenton notes that Corsi worked at FBI HQ, which coordinated liaisons with foreign services (Fenton, 313).

46 Fenton, Disconnecting the Dots, 310.

47 The 9/11 Commission Report discounted the importance of al-Bayoumi (217-18); but the Report of the Joint Congressional Inquiry into 9/11 (173-77), even though very heavily redacted at this point, supplied corroborating information, including a report that Basnan had once hosted a party for the Blind Sheikh Omar Abdurrahman, involved in the first World Trade Center bombing of 1993.

48 At first I suspected, as have others, that the two men were Saudi double agents. Another possibility is that they were sent as designated targets, to be surveilled by the Saudis and the Americans separately or together. One of my few disagreements with Fenton is when he calls al-Mihdhar one of [the hijackers] most experienced operatives (Fenton, Disconnecting the Dots, 205). My own impression is that he was either an inexperienced and incompetent spy, or else someone deliberately exposing himself to detection, in order to test American responses.

49 Summers, Eleventh Day, 396.

50 9/11 Commission Report, 184.

51 Steve Coll, Ghost Wars: the secret history of the CIA, Afghanistan, and bin Laden, from the Soviet invasion to September 10, 2001 (New York: Penguin, 2004), 456-57.

52 Thomas E. Ricks and Susan B. Glasser, Washington Post, October 14, 2001, here.

53 Ricks and Susan B. Glasser, Washington Post, October 14, 2001; cf.

54 In 1957, I myself, as a junior Canadian diplomat, acquired a special access, higher-than-top-secret clearance to access intelligence from NATO, a relatively overt and straightforward liaison.

55 For the Ali Mohamed story, see Scott, Road to 9/11, especially 151-60.

56 Scott, Road to 9/11, 158; citing John Berger, Unlocking 9/11: Paving the Road to 9/11 (here): Mohamed was one of the primary sources for the infamous Aug. 6, 2001, presidential daily brief (PDB) entitled Bin Laden Determined to Strike in U.S. The PDB, often cited as an example of the CIAs good performance, is in my opinion more probably another example of the Bin Laden Unit salting the record in preparation for post-9/11 scrutiny. The PDB, without naming Ali Mohamed, refers to him no less than three times as a threat, despite the fact that at the time he was under USG control awaiting sentence for his role in the 1998 embassy plots. The PDB, in other words, appears to have been a performance for the record, analogous to Wilshires performance in the same month of August at the FBI.

57 John Berger, Ali Mohamed, 20 (Cloonan); 9/11 Commission Report, 261 (PDB).

58 James Risen, New York Times, October 31, 1998; in Scott, Road to 9/11, 346-47.

59 Raleigh News and Observer, November 13, 2001; in Scott, Road to 9/11, 347. I have added the word Army. The HQ for USSOCOM itself is at Fort MacDill Air Force Vase in Florida.

60 Dana Priest and William M. Arkin, Top Secret America: A look at the militarys Joint Special Operations Command, Washington Post, September 2, 2011, here.

61 Fenton, Disconnecting the Dots, 168-69; Summers, Eleventh Day, 371, 550.

62 Fenton, Disconnecting the Dots, 372.

63 Scott, American War Machine, 161; Scott, Road to 9/11, 62-63.

64 Ahmed Rashid, Taliban: Militant Islam, oil, and fundamentalism in Central Asia (New Haven CT: Yale UP, 2000), 129.

65 John Prados, Safe for Democracy, 489; discussion in Scott, American War Machine, 12-13.

66 James Risen, State of War: the secret history of the CIA and the Bush administration (New York: Free Press, 2006), 188-89.

67 Fenton, Disconnecting the Dots, 104.

68 Summers, Eleventh Day, 397.

69 Joseph J. and Susan B. Trento, in Summers, Eleventh Day, 399. Since I presented this paper at a conference in Toronto on September 11, 2011, Bob Kerrey of Nebraska, a Democrat who served on the … 9/11 Commission, [has] said in a sworn affidavit … that significant questions remain unanswered about the role of Saudi institutions. Evidence relating to the plausible involvement of possible Saudi government agents in the September 11th attacks has never been fully pursued, Mr. Kerrey said (Saudi Arabia May Be Tied to 9/11, 2 Ex-Senators Say, New York Times, February 29, 2001, here).

70 Wright, Looming Tower, 161; in Summers, Eleventh Day, 216.

71 Such corruption is predictable and very widespread. In the notorious cases of Gregory Scarpa and Whitey Bulger, FBI agents in the New York and Boston offices were accused of giving their mob informants information that led to the murder of witnesses and other opponents. Agents in the New York office of the old Federal Bureau of Narcotics became so implicated in the trafficking of their informants that the FBN had to be shut down and reorganized.

72 Ralph Blumenthal, Tapes Depict Proposal to Thwart Bomb Used in Trade Center Blast, New York Times, October 28, 1993, emphasis added. The next day, the Times published a modest correction: Transcripts of tapes made secretly by an informant, Emad A. Salem, quote him as saying he warned the Government that a bomb was being built. But the transcripts do not make clear the extent to which the Federal authorities knew that the target was the World Trade Center.

73 Scott, Road to 9/11, 145.

74 Peter Dale Scott, "Bosnia, Kosovo, and Now Libya: The Human Costs of Washington's On-Going Collusion with Terrorists," Asia-Pacific Journal: Japan Focus, July 29, 2011, here. Evan Kohlmann has described how a Zagreb office in support of the Saudi-backed jihad in Bosnia received all orders and funding directly from the main United States office of Al-Kifah on Atlantic Avenue controlled by Shaykh Omar Abdel Rahman (Evan Kohlmann, Al-Qaidas Jihad in Europe, 39-41; citing Steve Coll and Steve LeVine, Global Network Provides Money, Haven, Washington Post, August 3, 1993).

75 Scott, Road to 9/11, 153, 347; citing Canada freed top al-Qaeda operative, {Toronto} Globe and Mail, November 22, 2001, here.

76 Scott, Road to 9/11, 151-59.

77 Ali Soufan, The Black Banners, 94-95, 561.

78 The corruption appears to be inevitable in superpowers states which have accumulated power in access of what is needed for their own defense. The pattern is less discernible in less powerful states like Canada.

79 "America's Afghanistan: The National Security and a Heroin-Ravaged State," Asia-Pacific Journal: Japan Focus, #20, 2009, May 18, 2009, here. Cf. U.S. looks into Afghan air force drug allegations, CNN, March 8, 2012, here: The United States is investigating allegations that some members of the Afghan air force have used their planes to transport drugs, a U.S. military spokesman said Thursday. Investigators want to know whether the drug-running allegations, first reported in the Wall Street Journal, are linked to the shooting deaths last year of eight U.S. Air Force officers at the airport in the Afghan capital, Kabul. The allegations of improper use of AAF aircraft is being looked into, said Lt. Col. Tim Stauffer, referring to the allegations that Afghan air force equipment has been used to illegally ferry drugs and arms.

80 Fenton, Disconnecting the Dots, 310.

81 Fenton, Disconnecting the Dots, 371, cf. 95.

82 Joint Chiefs of Staff, Courses of Action Related to Cuba (Case II), in Scott, American War Machine, 196.

83 Washington Post, September 30, 2001; in Summers, Eleventh Day, 293; cf. 9/11 Commission Report, 221-22.

84 See Scott, American War Machine, 199-203.

85 Fenton, Disconnecting the Dots, 360-61, 385. There was also apparent withholding of information at a high level in the US Joint Forces Command (USJFCOM): One official who attended the DO5 [a USJFCOM intelligence unit assigned to watch terrorism against the US] briefing was Vice Adm. Martin J. Meyer, the deputy commander in chief (DCINC), USJFCOM ….. But despite the red flags raised during the briefing, Meyer reportedly told Maj. Gen. Larry Arnold, the commander of the Continental United States NORAD Region (CONR), and other high-level CONR staffers two weeks before the 9/11 attacks that their concern about Osama bin Laden as a possible threat to America was unfounded and that, to repeat, If everyone would just turn off CNN, there wouldn't be a threat from Osama bin Laden'" (Jeffery Kaye and Jason Leopold, EXCLUSIVE: New Documents Claim Intelligence on Bin Laden, al-Qaeda Targets Withheld From Congress' 9/11 Probe, Truthout, June 13, 2011, here).

86 Scott, American War Machine, 201.

87 Scott, American War Machine, 200-02.

88 Clarke, Against All Enemies, 30-33; Summers, Eleventh Day, 175-76; James Bamford, A Pretext for War, 287.

89 Mark Selden has described the pattern of arousing nationalist passions as a result of attacks out of the blue as one which has undergirded the American way of war since 1898 (Mark Selden, The American Archipelago of Bases, Military Colonization and Pacific Empire: Prelude to the Permanent Warfare State, forthcoming, 2012, International Journal of Okinawan Studies).

90 Thomas E. Ricks and Susan B. Glasser, Washington Post, October 14, 2001, here. Significantly, the proposal for a joint attack force with Massouds Northern Alliance was also resisted by Massoud himself (Peter Tomsen, The Wars of Afghanistan, 597-98, 796n25). The problem of Massouds resistance to an American troop presence vanished when he was assassinated on September 9, 2011, two days before 9/11.

91 Coll, Ghost Wars, 467-69.

92 Coll, Ghost Wars, 513, 534-36, 553.

93 Coll, Ghost Wars, 558.

94 Coll, Ghost Wars, 573-74.

95 Fenton, Disconnecting the Dots, 108.

96 Fenton, Disconnecting the Dots, 110-14.

97 George Tenet, At the Center of the Storm: my years at the CIA (New York: HarperCollins, 2007), 255.

98 Jeremy Scahill, Shhhhhh! JSOC is Hiring Interrogators and Covert Operatives for 'Special Access Programs, Nation, August 25, 2010, here.

99 Fenton, Disconnecting the Dots, 127-30; Summers, Eleventh Day, 387-88.

100 Jason Vest, Implausible Denial II, Nation, May 31, 2004, here.

101 Peter Dale Scott, "Is the State of Emergency Superseding our Constitution? Continuity of Government Planning, War and American Society," November 28, 2010, here.

102 Scott, Road to 9/11, 216-18.

103 Joint Chiefs of Staff, Courses of Action Related to Cuba (Case II), Report of the J-5 to the Joint Chiefs of Staff, May 1, 1963, NARA #202-10002-10018, 21, here; Scott, American War Machine, 193, 196.

104 Scott, American War Machine, 195-205; Northwoods document, Joint Chiefs of Staff Central Files 1962-63, p. 178, NARA Record # 202-10002-10104.

105 Fenton, Disconnecting the Dots, 283-355; Scott, War Conspiracy, 341-96.

106 Jason Ditz, Report: CIA Drones Killed Over 2,000, Mostly Civilians in Pakistan Since 2006, AntiWar.com, January 2, 2011, here. Cf. Karen DeYoung, Secrecy defines Obamas drone war, Washington Post, December 19, 2011, here (hundreds of strikes over three years resulting in an estimated 1,350 to 2,250 deaths in Pak).

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Insider trading 9/11 … the facts laid bare


März 20th, 2012 Kommentare deaktiviert

AN ASIA TIMES ONLINE EXCLUSIVE INVESTIGATION: There can be no dispute that speculative trade in put options – where a party bets that a stock will drop abruptly in value – spiked in the days around September 11, 2001 – even if the US Securities and Exchange Commission and the 9/11 Commission will not say so. More than a few people must have had advance warning of the terror attacks, and they cashed in to the tune of millions of dollars.

By Lars Schall

The following article was published first at Asia Times Online under:



Is there any truth in the allegations that informed circles made substantial profits in the financial markets in connection to the terror attacks of September 11, 2001, on the United States?

Arguably, the best place to start is by examining put options, which occurred around Tuesday, September 11, 2001, to an abnormal extent, and at the beginning via software that played a key role: the Prosecutor’s Management Information System, abbreviated as PROMIS.

PROMIS is a software program that seems to be fitted with almost “magical” abilities. Furthermore, it is the subject of a decades-long dispute between its inventor, Bill Hamilton, and various people/institutions associated with intelligence agencies, military and security consultancy firms. [1]

One of the “magical” capabilities of PROMIS, one has to assume, is that it is equipped with artificial intelligence and was apparently from the outset “able to simultaneously read and integrate any number of different computer programs or databases, regardless of the language in which the original programs had been written or the operating systems and platforms on which that database was then currently installed.” [2]

And then it becomes really interesting:

What would you do if you possessed software that could think, understand every major language in the world, that provided peep-holes into everyone else’s computer “dressing rooms”, that could insert data into computers without people’s knowledge, that could fill in blanks beyond human reasoning, and also predict what people do – before they did it? You would probably use it, wouldn’t you? [3]

Granted, these capabilities sound hardly believable. In fact, the whole story of PROMIS, which Mike Ruppert develops in the course of his book Crossing the Rubicon in all its bizarre facets and turns, seems as if someone had developed a novel in the style of Philip K Dick and William Gibson. However, what Ruppert has collected about PROMIS is based on reputable sources as well as on results of personal investigations, which await a jury to take a first critical look at.

This seems all the more urgent if you add to the PROMIS capabilities “that it was a given that PROMIS was used for a wide variety of purposes by intelligence agencies, including the real-time monitoring of stock transactions on all the world´s major financial markets”. [4]

We are therefore dealing with a software that

a) Infiltrates computer and communication systems without being noticed.

B) Can manipulate data.

c) Is capable to track the global stock market trade in real time.

Point c is relevant to all that happened in connection with the never completely cleared up transactions that occurred just before September 11, [5] and of which the former chairman of the Deutsche Bundesbank Ernst Weltke said “could not have been planned and carried out without a certain knowledge”. [6]

I specifically asked financial journalist Max Keiser, who for years had worked on Wall Street as a stock and options trader, about the put option trades. Keiser pointed out in this context that he “had spoken with many brokers in the towers of the World Trade Center around that time. I heard firsthand about the airline put trade from brokers at Cantor Fitzgerald days before.” He then talked with me about an explosive issue, on which Ruppert elaborated in detail in Crossing the Rubicon.

Max Keiser: There are many aspects concerning these option purchases that have not been disclosed yet. I also worked at Alex Brown & Sons (ABS). Deutsche Bank bought Alex Brown & Sons in 1999. When the attacks occurred, ABS was owned by Deutsche Bank. An important person at ABS was Buzzy Krongard. I have met him several times at the offices in Baltimore. Krongard had transferred to become executive director at the CIA. The option purchases, in which ABS was involved, occurred in the offices of ABS in Baltimore. The noise which occurred between Baltimore, New York City and Langley was interesting, as you can imagine, to say the least.

Under consideration here is the fact that Alex Brown, a subsidiary of Deutsche Bank (where many of the alleged 9/11 hijackers handled their banking transactions – for example Mohammed Atta) traded massive put options purchases on United Airlines Company UAL through the Chicago Board Option Exchange (CBOE) – “to the embarrassment of investigators”, as British newspaper The Independent reported. [7]

On September 12, the chairman of the board of Deutsche Bank Alex Brown, Mayo A Shattuck III, suddenly and quietly renounced his post, although he still had a three-year contract with an annual salary of several million US dollars. One could perceive that as somehow strange.

A few weeks later, the press spokesperson of the Central Intelligence Agency (CIA) at that time, Tom Crispell, declined all comments, when he was contacted for a report for Ruppert´s website From the Wilderness, and had being asked “whether the Treasury Department or FBI [Federal Bureau of Investigation] had questioned CIA executive director and former Deutsche Bank-Alex Brown CEO [chief executive officer], A B ‘Buzzy’ Krongard, about CIA monitoring of financial markets using PROMIS and his former position as overseer of Brown’s ‘private client’ relations.” [8]

Just before he was recruited personally by former CIA chief George Tenet for the CIA, Krongard supervised mainly private client banking at Alex Brown. [9]

In any case, after 9/11 on the first trading day, when the US stock markets were open again, the stock price of UAL declined by 43%. (The four aircraft hijacked on September 11 were American Airlines Flight 11, American Airlines Flight 77 and UAL flights 175 and 93.)

With his background as a former options trader, Keiser explained an important issue to me in that regard.

Max Keiser: Put options are, if they are employed in a speculative trade, basically bets that stock prices will drop abruptly. The purchaser, who enters a time-specific contract with a seller, does not have to own the stock at the time when the contract is purchased.

Related to the issue of insider trading via (put or call) options there is also a noteworthy definition by the Swiss economists Remo Crameri, Marc Chesney and Loriano Mancini, notably that an option trade may be “identified as informed” – but is not yet (legally) proven – “when it is characterized by an unusual large increment in open interest and volume, induces large gains, and is not hedged in the stock market”. [10]

Open interest describes contracts which have not been settled (been exercised) by the end of the trading session, but are still open. Not hedged in the stock market means that the buyer of a (put or call) option holds no shares of the underlying asset, by which he might be able to mitigate or compensate losses if his trade doesn’t work out, or phrased differently: one does not hedge, because it is unnecessary, since one knows that the bet is one, pardon, “dead sure thing.” (In this respect it is thus not really a bet, because the result is not uncertain, but a foregone conclusion.)

In this case, the vehicle of the calculation was “ridiculously cheap put options which give the holder the ‘right’ for a period of time to sell certain shares at a price which is far below the current market price – which is a highly risky bet, because you lose money if at maturity the market price is still higher than the price agreed in the option. However, when these shares fell much deeper after the terrorist attacks, these options multiplied their value several hundred times because by now the selling price specified in the option was much higher than the market price. These risky games with short options are a sure indication for investors who knew that within a few days something would happen that would drastically reduce the market price of those shares.” [11]

Software such as PROMIS in turn is used with the precise intent to monitor the stock markets in real time to track price movements that appear suspicious. Therefore, the US intelligence services must have received clear warnings from the singular, never before sighted transactions prior to 9/11.

Of great importance with regard to the track, which should lead to the perpetrators if you were seriously contemplating to go after them, is this:

Max Keiser: The Options Clearing Corporation has a duty to handle the transactions, and does so rather anonymously – whereas the bank that executes the transaction as a broker can determine the identity of both parties.

But that may have hardly ever been the intention of the regulatory authorities when the track led to, amongst others, Alvin Bernard “Buzzy” Krongard, Alex Brown & Sons and the CIA. Ruppert, however, describes this case in Crossing the Rubicon in full length as far as possible. [12]

In addition, there are also ways and means for insiders to veil their tracks. In order to be less obvious, “the insiders could trade small numbers of contracts. These could be traded under multiple accounts to avoid drawing attention to large trading volumes going through one single large account. They could also trade small volumes in each contract but trade more contracts to avoid drawing attention. As open interest increases, non-insiders may detect a perceived signal and increase their trading activity. Insiders can then come back to enter into more transactions based on a seemingly significant trade signal from the market. In this regard, it would be difficult for the CBOE to ferret out the insiders from the non-insiders, because both are trading heavily.” [13]

The matter which needs clarification here is generally judged by Keiser as follows:

Max Keiser: My thought is that many (not all) of those who died on 9/11 were financial mercenaries – and we should feel the same about them as we feel about all mercenaries who get killed. The tragedy is that these companies mixed civilians with mercenaries, and that they were also killed. So have companies on Wall Street used civilians as human shields maybe?

According to a report by Bloomberg published in early October 2001, the US Securities and Exchange Commission (SEC) began a probe into certain stock market transactions around 9/11 that included 38 companies, among them: American Airlines, United Airlines, Continental Airlines, Northwest Airlines, Southwest Airlines, Boeing, Lockheed Martin Corp., American Express Corp., American International Group, AXA SA, Bank of America Corp., Bank of New York Corp., Bear Stearns, Citigroup, Lehman Brothers Holdings Inc., Morgan Stanley, General Motors and Raytheon. [14]

So far, so good. In the same month, however, the San Francisco Chronicle newspaper reported that the SEC took the unprecedented step to deputize hundreds, if not even thousands of key stakeholders in the private sector for their investigation. In a statement that was sent to almost all listed companies in the US, the SEC asked the addressed companies to assign senior staff for the investigation, who would be aware of “the sensitive nature” of the case and could be relied on to “exercise appropriate discretion”. [15]

In essence, it was about controlling information, not about provision and disclosure of facts. Such a course of action involves compromising consequences. Ruppert:

What happens when you deputize someone in a national security or criminal investigation is that you make it illegal for them to disclose publicly what they know. Smart move. In effect, they become government agents and are controlled by government regulations rather than their own conscience. In fact, they can be thrown into jail without a hearing if they talk publicly. I have seen this implied threat time after time with federal investigators, intelligence agents, and even members of United States Congress who are bound so tightly by secrecy oaths and agreements that they are not even able to disclose criminal activities inside the government for fear of incarceration. [16]

Among the reports about suspected insider trading which are mentioned in Crossing the Rubicon/From the Wilderness is a list that was published under the heading “Black Tuesday: The World’s Largest Insider Trading Scam?” by the Israeli Herzliyya International Policy Institute for Counterterrorism on September 21, 2001:

Between September 6 and 7, the CBOE saw purchases of 4,744 put options on United Airlines, but only 396 call options. Assuming that 4,000 of the options were bought by people with advance knowledge of the imminent attacks, these “insiders” would have profited by almost $5 million.

On September 10, 4,516 put options on American Airlines were bought on the Chicago exchange, compared to only 748 calls. Again, there was no news at that point to justify this imbalance; again, assuming that 4,000 of these options trades represent “insiders”, they would represent a gain of about $4 million.

[The levels of put options purchased above were more than six times higher than normal.]

No similar trading in other airlines occurred on the Chicago exchange in the days immediately preceding Black Tuesday.

Morgan Stanley Dean Witter & Co, which occupied 22 floors of the World Trade Center, saw 2,157 of its October $45 put options bought in the three trading days before Black Tuesday; this compares to an average of 27 contracts per day before September 6. Morgan Stanley’s share price fell from $48.90 to $42.50 in the aftermath of the attacks. Assuming that 2,000 of these options contracts were bought based upon knowledge of the approaching attacks, their purchasers could have profited by at least $1.2 million.

Merrill Lynch & Co, with headquarters near the Twin Towers, saw 12,215 October $45 put options bought in the four trading days before the attacks; the previous average volume in those shares had been 252 contracts per day (a 1200% increase). When trading resumed, Merrill’s shares fell from $46.88 to $41.50; assuming that 11,000 option contracts were bought by “insiders”, their profit would have been about $5.5 million.

European regulators are examining trades in Germany’s Munich Re, Switzerland’s Swiss Re, and AXA of France, all major reinsurers with exposure to the Black Tuesday disaster. (Note: AXA also owns more than 25% of American Airlines stock, making the attacks a “double whammy” for them.) [17]

Concerning the statements of the former chairman of the Deutsche Bundesbank Ernst Welteke, their tenor in various press reports put together is as follows:

German central bank president Ernst Welteke later reports that a study by his bank indicates, “There are ever clearer signs that there were activities on international financial markets that must have been carried out with the necessary expert knowledge,” not only in shares of heavily affected industries such as airlines and insurance companies, but also in gold and oil. [Daily Telegraph, 9/23/2001] His researchers have found “almost irrefutable proof of insider trading”. [Miami Herald, 9/24/2001] “If you look at movements in markets before and after the attack, it makes your brow furrow. But it is extremely difficult to really verify it.” Nevertheless, he believes that “in one or the other case it will be possible to pinpoint the source”. [Fox News, 9/22/2001] Welteke reports “a fundamentally inexplicable rise” in oil prices before the attacks [Miami Herald, 9/24/2001] and then a further rise of 13 percent the day after the attacks. Gold rises nonstop for days after the attacks. [Daily Telegraph, 9/23/2001] [18]

Related to those observations, I sent a request via e-mail to the press office of the Deutsche Bundesbank on August 1, 2011, from which I was hoping to learn:

How did the Bundesbank deal with this information? Did US federal agencies ask to see the study? With whom did the Bundesbank share this information? And additionally: 1. Can you confirm that there is such a study of the Bundesbank concerning 9/11 insider trading, which was carried out in September 2001?

2. If Yes: what is the title?

3. If Yes: who were the authors?

4. If Yes: has the study ever been made available to the public?

On August 2, I was then informed: “Your mail has been received by us and is being processed under the number 2011 / 011551.” Ultimately, however, the press office of the Deutsche Bundesbank was only available for an oral explanation on the phone. With this explanation, I then turned to the press office of the federal financial regulator in Germany, the Bundesanstalt fur Finanzdienstleistungsaufsicht, BaFin, with the following e-mail – and that because of obvious reasons:

Yesterday, I sent a request (see end of this e-mail) to the press office of the Deutsche Bundesbank relating to insider trading connected to the terrorist attacks on September 11, 2001, and respectively relating to an alleged study carried by the Deutsche Bundesbank. The request carries the reference number 2011 / 011551.

The press office or respectively Mr Peter Trautmann was only available for an oral explanation. I repeat this now, because it is related to your entity. This will be followed by my further questions.

According to an oral explanation from the press office of the Deutsche Bundesbank, there has never been a detailed and official study on insider trading from the Bundesbank. Rather, there has been probably ad-hoc analysis with corresponding charts of price movements as briefings for the Bundesbank board. In addition, it would have been the duty of the Bundesfinanzaufsicht to investigate this matter. The press office of the Bundesbank was also not willing to give out any written information, not even after my hint that this alleged study by the Bundesbank has been floating around the Internet for years without any contradiction. That was the oral information from the Bundesbank press office, or respectively from Mr Peter Trautmann.

Now my questions for you:

1. Has the BaFin ever investigated the 9/11 insider trading?

2. With what result? Have the results been made public?

3. Have there not been any grounds for suspicion that would have justified an investigation, for example as damaged enterprise: Munich Re, and as buyers of put options of UAL’s United Airlines Company: Deutsche Bank/Alex Brown?

4. Has the Deutsche Bundesbank ever enquired with BaFin what information they have regarding the 9/11 insider trading – for example for the creation of ad-hoc analysis for the Bundesbank?

5. Have the US federal agencies ever inquired if the BaFin could cooperate with them in an investigation?

Could you reply to me in writing, unlike the Deutsche Bundesbank, please? I would be very grateful for that!

The next day I did indeed receive an e-mail concerning this topic from Anja Engelland, the press officer of the BaFin in which she answered my questions as follows:

1. Yes, the former Bundesaufsichtsamt fur Wertpapierhandel, BAWe (federal supervisory for securities trading), has carried out a comprehensive analysis of the operations.

2. As a result, no evidence of insider trading has been found. Their approach and results have been published by the BAWe or BaFin in the annual reports for the years 2001 (cf S 26/27) and 2002 (cf p 156 above first paragraph). Here are the links. [see here and here.]

3. See annual reports 2001 and 2002. Put options on United Airlines were not traded on German stock exchanges (the first EUREX options on US equities were introduced only after the attacks on 9/11/2001); there were warrants on UAL and other US stocks, but those traded only in low volumes.

4. I personally do not know about such a request. Furthermore, the Bundesbank itself would have to comment on this.

5. BaFin is fundamentally entitled to the exchange of information with foreign supervisory authorities, like SEC, on the basis of written agreements, so-called memoranda of understanding (MoU). Regarding potential inquiries from foreign supervisory authorities, the BaFin can unfortunately not comment, this would be a matter of respective authority. For this I ask for understanding.

Then I wrote another brief note to BaFin, “in order to prevent any misunderstanding: your answers refers, as far as I understand, solely to the financial markets in Germany and Frankfurt, or not?” The reply from BaFin:

The answers refer to the German financial market as a whole and not only on the Frankfurt Stock Exchange. In terms of the assessment of foreign financial markets, the relevant authorities are the competent points of contact.

In my inquiries, I mentioned, among other things, a scientific study by US economist Allen M Poteshman from the University of Illinois at Urbana-Champaign, which had been carried out in 2006 regarding the put option trading around 9/11 related to the two airlines involved, United Airlines and American Airlines. Poteshman came to this conclusion: “Examination of the option trading leading up to September 11 reveals that there was an unusually high level of put buying. This finding is consistent with informed investors having traded options in advance of the attacks.” [19]

Another scientific study was conducted by the economists Wong Wing-Keung (Hong Kong Baptist University, HKBU), Howard E Thompson (University of Wisconsin) and Kweehong Teh (National University of Singapore, NUS), whose findings were published in April 2010 under the title “Was there Abnormal Trading in the S&P 500 Index Options Prior to the September 11 Attacks?”

Motivated by the fact that there had been many media reports about possible insider trading prior to 9/11 in the option markets, the authors looked in this study at the Standard & Poor’s 500 Index (SPX Index Options), in particular with a focus on strategies emanating from a bear market, namely those under the labels “Put Purchase,” “Put Bear Spread” and “Naked ITM Call Write”, as each of these are in accordance with the assumption that one would be betting on a general bear market if one wanted to profit in anticipation of the 9/11 event. [20]

Along these lines, the authors refer to an article which Erin E Arvedlund published on October 8, 2001, in Barron’s, the heading of which suggested precisely that thesis: “Follow the money: Terror plotters could have benefited more from the fall of the entire market than from individual stocks.” [21]

Basically, Wong, Thompson and Teh came to the conclusion “that our findings show that there was a significant abnormal increase in the trading volume in the option market just before the 9-11 attacks in contrast with the absence of abnormal trading volume far before the attacks”.

More specifically, they stated, “Our findings from the out-of-the-money (OTM), at-the-money (ATM) and in-the-money (ITM) SPX index put options and ITM SPX index call options lead us to reject the null hypotheses that there was no abnormal trading in these contracts before September 11th.”

Instead, they found evidence for “abnormal trading volume in OTM, ATM and ITM SPX index put options” for September 2001, and also in “ITM-SPX index call options” for the same month. “In addition, we find that there was evidence of abnormal trading in the September 2001 OTM, ATM and ITM SPX index put options immediately after the 9-11 attacks and before the expiration date. This suggests that owning a put was a valuable investment and those who owned them could sell them for a considerable profit before the expiration date.”

From all of this, they took the position that whilst they couldn’t definitively prove that insiders were active in the market, “our results provide credible circumstantial evidence to support the insider trading claim”. [22]

Disambiguation: “in the money” means that the circumstances arise on which the owner of a put option is betting – the market price of the underlying asset, for example a stock (or in this case an index of shares), is lower at that moment compared to the price at the time when the transaction took place. “At the money” means that the price of the underlying asset has remained equal or nearly equal. And “out-of-the-money” means that the price of the underlying asset has gone up, so the opposite of what the owner of the put option was betting on took place. “In the money”: win. “Out of the money”: loss.

There are also ITM, ATM and OTM options both for trading strategies with put and call options, depending on which kind of risk one would like to take. For example, according to Wong, Thomson and Teh, the “Put-Purchase Strategy” in the case of a downward movement of the underlying asset “is a cheaper alternative to short-selling of the underlying asset and it is the simplest way to profit when the price of the underlying asset is expected to decline”.

The use of the OTM put option compared to the ITM put option, however, offers “both higher reward and higher risk potentials (…) if the underlying asset falls substantially in price. However, should the underlying asset decline only moderately in price, the ITM put often proves to be the better choice (…) because of the relative price differential.”

That is why speculators would fare best, if they bought ITM put options, “unless the speculators would expect a very substantial decline in the price of the underlying asset.” [23]

After they calculated such strategies in the light of the available trading data in the CBOE relating to 9/11, the three economists ultimately do not accept a possible counter-argument that their results could be attributed to the fact that the stock markets were generally falling and that there had already been a negative market outlook. Finally they pointed out: “More conclusive evidence is needed to prove definitively that insiders were indeed active in the market. Although we have discredited the possibility of abnormal volume due to the declining market, such investigative work would still be a very involved exercise in view of the multitude of other confounding factors,” such as confusing trading strategies, “intentionally employed by the insiders” in order to attract less attention. [24]

That would be – and if only to invalidate these scientific results once and for all – primarily a task for the SEC, the FBI and other governmental authorities of the United States. However, we will have to wait for this in vain.

I think that not less worthy of a mention is an article that the French financial magazine Les Echos published in September 2007 about a study conducted by two independent economics professors from the University of Zurich, Marc Chesney and Loriano Mancini. Journalist Marina Alcaraz summarized the content of the findings in Les Echos with these words and with these explanations by Professor Chesney, which I for the first time translated into German (and do now translate from French into English):

“The atypical volumes, which are very rare for specific stocks lead to the suspicion of insider trading.” Six years after the attacks on the World Trade Center this is the disturbing results of a recent study by Marc Chesney and Loriano Mancini, professors at the University of Zurich. The authors, one of them a specialist in derivative products, the other a specialist in econometrics, worked on the sales options that were used to speculate on the decline in the prices of 20 large American companies, particularly in the aerospace and financial sector.

Their analysis refers to the execution of transactions between the 6th and 10th of September 2001 compared to the average volumes, which were collected over a long period (10 years for most of the companies). In addition, the two specialists calculated the probability that different options within the same sector in significant volumes would be traded within a few days. “We have tried to see if the movements of specific stocks shortly before the attacks were normal.” We show that the movements for certain companies such as American Airlines, United Airlines, Merrill Lynch, Bank of America, Citigroup, Marsh & McLehnan are rare from a statistical point of view, especially when compared to the quantities that have been observed for other assets like Coca-Cola or HP,” explains Marc Chesney, a former Professor at the HEC and co-author of Blanchiment et financement du terrorisme (Money laundering and financing of terrorism), published by Editions Ellipses. “For example 1,535 put option contracts on American Airlines with a strike of $30 and expiry in October 2001 were traded on September 10th, in contrast to a daily average of around 24 contracts over the previous three weeks. The fact that the market was currently in a bear market is not sufficient to explain these surprising volumes.”

The authors also examined the profitability of the put options and trades for an investor who acquired such a product between the 6th and 10th September. “For specific titles, the profits were enormous.” “For example, the investors who acquired put options on Citigroup with an expiry in October 2001 could have made more than $15 million profit,” he said. On the basis of the connection of data between volumes and profitability, the two authors conclude that “the probability that crimes by Insiders (Insider trading) occurred , is very strong in the cases of American Airlines, United Airlines, Merrill Lynch, Bank of America, Citigroup and JP Morgan. “There is no legal evidence, but these are the results of statistical methods, confirming the signs of irregularities.” [25]

As Alcaraz continued to state for Les Echos, the study by Chesney/Mancini about possible insider trading related to the 9/11 attacks was not the first of its kind; but it was in sharp contrast to the findings of the US Securities and Exchange Commission SEC and the 9/11 Commission, since they classified the insider trading as negligible – the trades in question had no connection to 9/11 and had “consistently proved innocuous”.

Different in the assessment is also the scientific work that Chesney and Mancini had published together with Remo Crameri in April 2010 at the University of Zurich, “Detecting Informed Trading Activities in the option markets.” In the segment that is dedicated to the terror attacks of 9/11, the three authors come to the conclusion, that there had been notable insider trading shortly before the terrorist attacks on September 11 that was based on prior knowledge.

Without elaborating on the detailed explanation of the mathematical and statistical method, which the scientific trio applied during the examination of the put option transactions on the CBOE for the period between 1996 and 2006, I summarize some of their significant conclusions.

“Companies like American Airlines, United Airlines, Boeing” – the latter company is a contractor of the two airlines as aircraft manufacturer – “and to a lesser extent, Delta Air Lines and KLM seem to have been targets for informed trading activities in the period leading up to the attacks. The number of new put options issued during that period is statistically high and the total gains realized by exercising these options amount to more than $16 million. These findings support the results by Poteshman (2006) who also reports unusual activities in the option market before the terrorist attacks.” [26]

In the banking sector, Chesney, Crameri and Mancini found five informed trading activities in connection to 9/11. “For example the number of new put options with underlying stock in Bank of America, Citigroup, JP Morgan and Merrill Lynch issued in the days before the terrorist attacks was at an unusually high level. The realized gains from such trading strategies are around $11 million.” [27]

For both areas, the aviation and the banking sector, the authors state that “in nearly all cases the hypothesis”, that the put options were not hedged, “cannot be rejected”. [28]

Regarding the options traded on EUREX, one of the world’s largest trading places for derivatives, which in 1998 resulted from the merger between the German and Swiss futures exchanges DTB and SOFFEX, Chesney, Mancini and Crameri focused on two reinsurance companies, which incurred costs in terms of billions of dollars in connection with the World Trade Center catastrophe: Munich Re and Swiss Re.

On the basis of EUREX trading data provided by Deutsche Bank, the three scientists detected one informed option trade related to Munich Re, which occurred on August 30, 2001. The authors write: “The detected put option with underlying Munich Re matured at the end of September 2001 and had a strike of € 320 (the underlying asset was traded at € 300, 86 on August 30th). That option shows a large increment in open interest of 996 contracts (at 92.2% quintile of its two-year empirical distribution) on August 30th.

Its price on that day was € 10, 22. … On the day of the terrorist attacks, the underlying stock lost more than 15% (the closing price on September 10th was € 261, 88 and on September 11th € 220, 53) and the option price jumped to € 89, 56, corresponding to a return of 776% in eight trading days. … The gains … related to the exercise of the 996 new put options issued on August 30th correspond to more than 3.4 million.” Similar is true, according to the authors, for one informed option trade on Swiss Re on August 20, 2001 with “a return of 4,050% in three trading weeks”, or “more than € 8 million.” [29]

In a new version of their study that was published on September 7, 2011, the authors stuck to their findings from April 2010. They added the emphasis that in no way the profits gained with the put options to which they point could have been achieved due to sheer fortunate coincidence, but that in fact they were based on prior knowledge which had been exploited. [30]

With those results in terms of what went on at the EUREX according to Chesney, Crameri and Mancini, I again addressed the BaFin, which had written to me that for the financial centers in Germany insider trading around 9/11 could be excluded, and asked:

How does this go with your information that the federal supervisory for securities trading (BAWe) could in its comprehensive analysis not find evidence for insider trading? Do the authors, so to speak, see ghosts with no good reason?

In addition, I stated:

If it is true what Chesney, Crameri and Mancini write, or if you at the BaFin cannot (ad hoc) refute it, would this then cause the BaFin to thoroughly investigate the matter again? If the findings of Chesney, Crameri, and Mancini were true, this would constitute illegal transactions relating to a capital crime, which has no status of limitations, or not?

In case that a need for clarification had arisen at the BaFin, I added Professor Chesney to my e-mail-inquiry in the “carbon copy” – address field, as because these were the results of his scientific work.

The response that I received from BaFin employee Dominika Kula was as follows:

As I already told you in my e-mail, the former federal supervisory for securities trading (BAWe) carried out a comprehensive analysis of the operations in 2001. As a result, no evidence of insider trading has been found. For clarification purposes, I wish to point out that violations of statutory provisions of securities or criminal law can never be excluded with absolute certainty. In order to pursue and prosecute such matters concrete evidence of an unlawful act is required … Such evidence does not exist here.

With regard to the sources you mentioned, I ask for understanding that I can neither comment on scientific analyses, nor on reviews by third parties.

Regarding the statutes of limitations for offences relating to the violation insider trading regulations trading I can give you the following information: A violation of the law to prohibit insider trading is punishable with imprisonment up to 5 years or with fines. The statutes of limitations applied for crimes carrying this kind of penalty (section 78 paragraph 3 No. 4 Penal Code) are five years. These limitations are described in the statutes of limitations (§§ 78 et seq.) (Criminal Code).

In addition, I turned to the EUREX with three questions:

1. How do you as EUREX comment on the findings of Messrs Chesney, Mancini and Crameri?

2. Did you at EUREX perceive the particular trading in Munich Re and Swiss Re it in any way as strange?

3. Have domestic (eg BAWe and BaFin) or foreign (such as the U.S. Securities and Exchange Commission) authorities ever inquired if there may have been evidence of insider trading via the EUREX in connection with the 9/11 attacks?

I subsequently received the following response from Heiner Seidel, the deputy head of the press office of the Deutsche Borse in Frankfurt.

We do not give you a public written response on behalf of the Deutsche Börse or Eurex regarding the topics of your inquiry. This is for the following reason: the trade monitoring agency (HüSt) is part of the Exchange, but it is independent and autonomous. Their investigations are confidential and are carried out in close coordination with the BaFin. They are never public, a request which HüSt is therefore not meaningful.

I leave it to the reader to draw his/her conclusions from these two replies from the press offices of BaFin and Deutsche Borse. Regarding the topic of option trades related to 9/11, I once more talked with Swiss historian Dr Daniele Ganser (“Operation Gladio”), by asking him this time about the importance of those put options, which were traded shortly before the attacks of September 11, 2001.

Daniele Ganser: This is an important point. This is about demonstrating that there was insider trading on the international stock exchanges before 11 September. Specifically put options, ie speculation on falling stock prices were traded. Among the affected stocks were United Airlines and American Airlines, the two airlines involved in the attacks.

A colleague of mine, Marc Chesney, professor at the Institute of banking at the University of Zurich, has examined these put options. You first of all have to check if there may have been international speculation that the aviation industry would be experiencing a weak period and whether accordingly also put options on Singapore Airlines, Lufthansa and Swiss were bought. This was not the case.

Very significant put option trades were only transacted for these two airlines involved in the attacks. Secondly, you must examine the ratio of put options to call options and look if they had also been purchased to a similarly significant extent that would constitute speculations on rising stock prices. And that is also not the case. There were only significant put options and only significant transactions for United Airlines and American Airlines.

Now you need to look further in order to see who actually bought the put options, because that would be the insider who made millions on September 11. Most people are unaware that money was also earned with the attacks on September 11. The Security and Exchange Commission, SEC, the Securities and Exchange Commission of the United States, however, does not publish the information on who bought the put options, because you can do this anonymously. It is disturbing that this data is not made public.

What you have is the 9/11 Commission report, and here it is pointed out , that there has been insider trading, but that this insider trading cannot be traced to [al-Qaeda leader] Osama bin Laden, which means that it is highly unlikely that it had been Bin Laden.

Question: If this is not pursued any further, what does it mean?

Daniele Ganser: This means that the investigation of the terrorist attacks was incomplete, and always at the point where there are contradictions to the SURPRISE story, no further investigations are made. It looks very much as if one wants to examine only one story, the investigation is therefore one-sided. But this does not only apply to the put options. [31]

Interestingly enough, when Dr Ganser points out in his reply that this important data is not published, it is actually only half of the truth. Why? The answer is very simple and odd at the same time: David Callahan, the editor of the US magazine SmartCEO, filed a request to the SEC about the put options which occurred prior to September 11 within the framework of the Freedom of Information Act (FOIA). The SEC informed Callahan in its reply of December 23, 2009 under the number “09 07659-FOIA” as follows:

This letter is in response to your request seeking access to and copies of the documentary evidence referred to in footnote 130 of Chapter 5 of the September 11 (9/11) Commission Report… We have been advised that the potentially responsive records have been destroyed. [32]

Therefore, we will unfortunately never know exactly how the SEC and the 9/11 Commission came to their conclusions regarding the 9/11 put options trading for their final report, because relevant documents were not only held back, but also destroyed – and that in spite of an agreement between the SEC and the National Archive of the United States, in which the SEC has agreed to keep all records for at least 25 years. [33]

The 9/11 Commission report wrote this in footnote 130 of Chapter 5, which briefly focuses on the alleged insider trading:

Highly publicized allegations of insider trading in advance of 9 / 11 generally rest on reports of unusual pre-9/11 trading activity in companies whose stock plummeted after the attacks. Some unusual trading did in fact occur, but each such trade proved to have an innocuous explanation. For example, the volume of put options – investments that pay off only when a stock drops in price – surged in the parent companies of United Airlines on September 6 and American Airlines on September 10 – highly suspicious trading on its face.

Yet, further investigation has revealed that the trading had no connection with 9/11. A single US-based institutional investor with no conceivable ties to al-Qaeda purchased 95 percent of the UAL puts on September 6 as part of a trading strategy that also included buying 115,000 shares of American on September 10. Similarly, much of the seemingly suspicious trading in American on September 10 was traced to a specific US-based options trading newsletter, faxed to its subscribers on Sunday, September 9, which recommended these trades.

These examples typify the evidence examined by the investigation. The SEC and the FBI, aided by other agencies and the securities industry, devoted enormous resources to investigating this issue, including securing the cooperation of many foreign governments. These investigators have found that the apparently suspicious consistently proved innocuous. (Joseph Cella interview (Sept 16, 2003; May 7, 2004; May 10-11, 2004); FBI briefing (Aug 15, 2003); SEC memo, Division of Enforcement to SEC Chair and Commissioners, “Pre-September 11, 2001 Trading Review,” May 15, 2002; Ken Breen interview (Apr. 23, 2004); Ed G. interview (Feb. 3, 2004).

The author Mark H Gaffney commented on this finding of “innocuousness”:

Notice … the commission makes no mention in its footnote of the 36 other companies identified by the SEC in its insider trading probe. What about the pre-9/11 surge in call options for Raytheon, for instance, or the spike in put options for the behemoth Morgan Stanley, which had offices in WTC 2? The 9/11 Commission Report offers not one word of explanation about any of this. The truth, we must conclude, is to be found between the lines in the report’s conspicuous avoidance of the lion’s share of the insider trading issue.

Indeed, if the trading was truly “innocuous”, as the report states, then why did the SEC muzzle potential whistleblowers by deputizing everyone involved with its investigation? The likely answer is that so many players on Wall Street were involved that the SEC could not risk an open process, for fear of exposing the unthinkable. This would explain why the SEC limited the flow of information to those with a “need to know”, which, of course, means that very few participants in the SEC investigation had the full picture.

It would also explain why the SEC ultimately named no names. All of which hints at the true and frightening extent of criminal activity on Wall Street in the days and hours before 9/11. The SEC was like a surgeon who opens a patient on the operating room table to remove a tumor, only to sew him back up again after finding that the cancer has metastasized through the system.

At an early stage of its investigation, perhaps before SEC officials were fully aware of the implications, the SEC did recommend that the FBI investigate two suspicious transactions. We know about this thanks to a 9/11 Commission memorandum declassified in May 2009 which summarizes an August 2003 meeting at which FBI agents briefed the commission on the insider trading issue. The document indicates that the SEC passed the information about the suspicious trading to the FBI on September 21, 2001, just ten days after the 9/11 attacks.

Although the names in both cases are censored from the declassified document, thanks to some nice detective work by Kevin Ryan we know whom (in one case) the SEC was referring to. The identity of the suspicious trader is a stunner that should have become prime-time news on every network, world-wide. Kevin Ryan was able to fill in the blanks because, fortunately, the censor left enough details in the document to identify the suspicious party who, as it turns out, was none other than Wirt Walker III, a distant cousin to then-president G W Bush.

Several days before 9/11, Walker and his wife Sally purchased 56,000 shares of stock in Stratesec, one of the companies that provided security at the World Trade Center up until the day of the attacks. Notably, Stratesec also provided security at Dulles International Airport, where AA 77 took off on 9/11, and also security for United Airlines, which owned two of the other three allegedly hijacked aircraft. At the time, Walker was a director of Stratesec. Amazingly, Bush’s brother Marvin was also on the board.

Walker’s investment paid off handsomely, gaining $50,000 in value in a matter of a few days. Given the links to the World Trade Center and the Bush family, the SEC lead should have sparked an intensive FBI investigation. Yet, incredibly, in a mind-boggling example of criminal malfeasance, the FBI concluded that because Walker and his wife had “no ties to terrorism … there was no reason to pursue the investigation.” The FBI did not conduct a single interview. [34]

For this translation, I asked Kevin Ryan via e-mail if he could send me a link for his “nice detective work”. Ryan, who’s in my humble opinion one of roughly 10 people around the world who have to be taken seriously regarding 9/11, replied:

You are referring to my paper “Evidence for Informed Trading on the Attacks of September 11.” [see here.] The following two references from the paper are relevant to what you are describing. [2] 9/11 Commission memorandum entitled “FBI Briefing on Trading”, prepared by Doug Greenburg, 18 August 2003, [22].

The 9/11 Commission memorandum that summarized the FBI investigations refers to the traders involved in the Stratesec purchase. From the references in the document, we can make out that the two people had the same last name and were related. This fits the description of Wirt and Sally Walker, who were known to be stock holders in Stratesec. Additionally, one (Wirt) was a director at the company, a director at a publicly traded company in Oklahoma (Aviation General), and chairman of an investment firm in Washington, DC (Kuwam Corp). Here are two other recent articles on Stratesec and its operators. [see here and here.]

The stock of Stratesec, I should add by myself, increased in value from $0.75 per share on September 11 to $1.49 per share when the market re-opened on September 17. As a firm that provides technology-based security for large commercial and government facilities, Stratesec benefited from the soaring demand of security companies right after 9/11.

It is also remarkable what Ryan wrote to me regarding a company on which he did some research, too: Viisage Corp, another high-tech security firm.

Kevin Ryan: In late 2005, George Tenet became a director for Viisage, which had been flagged by the SEC for 9/11 trading but never investigated. Viisage was led by Roger LaPenta, formerly of Lockheed.

Seven months later, in 2006, FBI director Louis Freeh also joined the Viisage board. One might think that when both the CIA director (on 9/11) and the FBI director (from 1993 to June 2001) joined a company suspected of 9/11 insider trading, we might want to go back and actually investigate the SEC’s flagging of that company. But, of course, that was not the case. In 2009, “Bandar Bush” hired Freeh as his personal attorney.

Freeh is nowadays the bankruptcy trustee of the alleged market manipulator MF Global. And about his client, the former Saudi ambassador Prince Bandar, I should add that we know for sure that he bankrolled indirectly via his wife two of the alleged would-be 9/11 hijackers, Khalid Al-Mihdhar and Nawaf Al-Hazmi. [35]

But let’s get back to the subject of destruction. On September 11, not only human life, aircraft and buildings were destroyed in New York City, but also data on computers and in archives. For example, several federal agencies occupied space in Building 7 of the World Trade Center, including the Securities and Exchange Commission on floors 11 to 13.

Those and other data could have given information about the alleged 9/11 insider trading (though it seems to be very unlikely that no backup existed elsewhere independent of the local computer systems). In fact, some technology companies were commissioned to recover damaged hard disks, which had been recovered from the debris and dust of Ground Zero.

One of these companies was the English company group Convar, more precisely: their data rescue center in the German city Pirmasens. Erik Kirschbaum from the news agency Reuters reported in December 2001 that Convar had at that time successfully restored information from 32 computers, supporting “suspicions that some of the 911 transactions were illegal”.

‘The suspicion is that inside information about the attack was used to send financial transaction commands and authorizations in the belief that amid all the chaos the criminals would have, at the very least, a good head start,’ says Convar director Peter Henschel.” [36] Convar received the costly orders – according to Kirschbaum´s report the companies had to pay between $20,000 and $30,000 per rescued computer – in particular from credit card companies, because: “There was a sharp rise in credit card transactions moving through some computer systems at the WTC shortly before the planes hit the twin towers. This could be a criminal enterprise – in which case, did they get advance warning? Or was it only a coincidence that more than $100 million was rushed through the computers as the disaster unfolded?” [37]

The companies for which Convar was active cooperated with the FBI. If the data were reconstructed they should have been passed on to the FBI, and the FBI, according to its statutory mandate, should have initiated further investigation based on the data to find out who carried out these transactions. Henschel was optimistic at the time that the sources for the transactions would come to light.

Richard Wagner, a Convar employee, told Kirschbaum that “illegal transfers of more than $100 million might have been made immediately before and during the disaster. ‘There is a suspicion that some people had advance knowledge of the approximate time of the plane crashes in order to move out amounts exceeding $100 million,’ he says. ‘They thought that the records of their transactions could not be traced after the main frames were destroyed’.” [38]

Wagner’s observation that there had been “illegal financial transactions shortly before and during the WTC disaster” matches an observation which Ruppert describes in Crossing the Rubicon. Ruppert was contacted by an employee of Deutsche Bank, who survived the WTC disaster by leaving the scene when the second aircraft had hit its target.

According to the employee, about five minutes before the attack the entire Deutsche Bank computer system had been taken over by something external that no one in the office recognized and every file was downloaded at lightning speed to an unknown location. The employee, afraid for his life, lost many of his friends on September 11, and he was well aware of the role which the Deutsche Bank subsidiary Alex Brown had played in insider trading. [39]

I was curious and wanted more information from Convar regarding their work on the WTC-computer hard drives, but also about the statements made by Peter Henschel and Richard Wagner. Thus, I contacted the agency which represents Convar for press matters, with a written request. But their agency “ars publicandi” informed me swiftly:

Due to time constraints, we can currently offer you neither information nor anyone on the part of our client to talk to regarding this requested topic.

I also approached KrollOntrack, a very interesting competitor of Convar in writing. Ontrack Data Recovery, which also has subsidiaries in Germany, was purchased in 2002 by Kroll Inc – “one of the nation’s most powerful private investigative and security firms, which has long-standing involvement with executive protection US government officials including the president. This would require close liaison with the Secret Service.” [40]

At the time of the 9/11 attacks, a certain Jerome Hauer was one of the managing directors at Kroll Inc. He had previously established the crisis center for the mayor of New York City as director of the Office of Emergency Management (OEM), which occupied office space on the 23rd floor of the WTC Building 7. Hauer helped former FBI agent John O’Neill to get the post of the head of Security Affairs at the WTC, and spent the night of September 11 with O’Neill in New York before the latter lost his life on September 11 in the WTC. Hauer was most likely involved in the planning of “Tripod II”, the war game exercise at the port of New York City. [41]

Therefore, I found it appealing to uncover some more details of this aspect, or, more accurately to find out if Ontrack or KrollOntrack had received an order in 2001 or after to rescue computer hard drives from the WTC. The answer I received from KrollOntrack said:

Kroll Ontrack was not at the site of the data recovery – the devices at the Twin Towers have been completely destroyed or vaporized. The firm Kroll was, however, at that time active in the field of computer-forensic investigations, securing devices in the surrounding buildings.

In essence, these two inquiries did not help me at all. If anything, a further question arose: why did KrollOntrack send me a response, where it was really obvious that the content did not match the facts? After all, I had written in my inquiry that Convar had received orders to restore damaged computer hard drives from the World Trade Center.

I sent a new inquiry, attaching a link for Erik Kirschbaum’s Reuters article and additional cinematic reports on Convar’s which showed that some of the WTC disks had not been “completely destroyed or vaporized”. I stated to KrollOntrack: “Your answer does not seem to match the facts, when it comes to ‘completely destroyed or vaporized’. Will you still stick to your answer?”

KrollOntrack then replied that their previously given assessment constituted “not a statement, but an opinion”.

I do not find this assessment worthless, because it is in line with the knowledge of the general public and can easily be refuted in argumentum in contrario by Convar´s activities.

One film report to which I referred to in my second inquiry to KrollOntrack originated from the German television journal Heute-Journal broadcast on March 11, 2002, on ZDF, and the other from the Dutch TV documentary Zembla, broadcast on September 10, 2006.

The ZDF report showed that Convar received the WTC disks from the US Department of Defense and that Convar had managed until March 2002 to recover more than 400 hard drives. It also reported that the private companies that employed Convar had paid between $25,000 and $50,000 per hard drive. In the TV documentary Zembla, Convar essentially maintained its position as it had been reported by Erik Kirschbaum in 2001.

Obviously, in connection with 9/11 there has not only been insider trading via put options, but there is additional evidence that there have been illegal financial transactions via credit cards through which more than 100 million US dollars were removed from the WTC computer systems.

Those occurred shortly before and during the WTC disaster. It remains unclear what the FBI did later on with the data recovered by Convar. On the other hand, it may have been not very much, as can be seen from a memorandum from the 9/11 Commission, which was released in May 2009.

The 9/11 Commission asked the FBI about the use of credit cards for insider dealing. On the basis of the information provided by the FBI, the commission came to the conclusion that no such activity occurred because “the assembled agents expressed no knowledge of the reported hard-drive recovery effort or the alleged scheme” – but above all “everything at the WTC was pulverized to near powder, making it extremely unlikely that any hard-drives survived”. [42]

The activities of Convar, however, prove the exact opposite.

But it gets even better. According to Zembla, the FBI was directly involved with the data rescue efforts of Convar. And on top of it, the broadcast of Heute-Journal reported that Convar worked in that “highly sensitive” matter with several federal agencies of the United States government.

So there have been ample indications for insider trading based on foreknowledge of the attacks, but there are very few hard facts as Catherine Austin Fitts, a former managing director and member of the board of the Wall Street investment bank Dillon, Read & Co, Inc (now part of UBS), pointed out when I talked with her about this topic.

Ms Fitts, what are your general thoughts related to the alleged 9/11-insider trading?

Catherine Austin Fitts: Well, I’ve never been able to see concrete evidence that the insider trading has been proved. There’s a lot of anecdotal information from investment bankers and people in the investment community that indicate that there was significant insider trading, particularly in the currency and bond markets, but again it hasn’t been documented.

I think around situations like 9/11 we’ve seen things that can only be explained as insider trading. Therefore, it wouldn’t surprise me if it turns out the allegations are true, because my suspicion is that 9/11 was an extremely profitable covert operation and a lot of the profits came from the trading. It wouldn’t even surprise me if it turns out that the Exchange Stabilization Fund traded it and that some of the funding for the compensation fund for the victims came from the ESF.

Insider trading happens around these kinds of events, but if you really want to produce evidence of insider trading, you need the subpoena powers of the SEC, and of course we know that they haven’t exercised them. If anything, right after 9/11, the government settled a significant amount of cases I presume because a lot of the documents were destroyed by the destruction of WTC building number 7, where the SEC offices and other governmental investigation offices were. [43]

Fitts, who had written a longer essay in 2004 related to this, replied to my question about who had benefited from 9/11:

Catherine Austin Fitts: 9/11 was extraordinarily profitable for Wall Street, they of course got a kind of “Get Out of Jail Free card” as I’ve just described. In addition, the largest broker of government bonds, Cantor Fitzgerald, was destroyed, and there was a great deal of money missing from the federal government in the prior four or five years. If you look at the amount of funds involved, it is hard to come to a conclusion other than massive securities fraud was involved, so I find it very interesting that this happened. [44]

A short explanation: Cantor Fitzgerald’s headquarters were located in the North Tower of the WTC (floors 101-105). On 9/11, the company lost nearly two-thirds of its entire workforce, more than any other tenant in the WTC. (Also two other government bonds brokers, Garbon Inter Capital and Eurobrokers, occupied office space in the WTC towers that were destroyed.) Back to Fitts and the question: “Cui bono 9/11?”

Catherine Austin Fitts: In addition, the federal government took the position that they couldn’t produce audited financial statements after 9/11, because they said the office at the Pentagon that produced financial statements was destroyed. Now given what I know of the federal set up of financial statements, I am skeptical of that statement.

But needless to say, if you take the government on its word, you had another “Get Out of Jail Free card” for four trillion dollars and more missing from the federal government. So if you’re just looking at the financial fraud angle, there were a lot of parties that benefited from 9/11. But then of course what 9/11 did, it staged the passage of the Patriot Act and a whole series of laws and regulations that I collectively refer to as “The Control on Concentration of Cash Flow Act.” It gave incredible powers to centralize.

In addition, if you look at monetary policies right after 9/11 – I remember I was over in the City of London driving around with a money manager and his phone rang and he answered it on his speaker phone. It was somebody on Wall Street who he hadn’t talked to since before 9/11, and he said to him: “Oh Harry, I am so sorry about what has happened, it must have been very traumatic.” And the guy said: “Don’t be ridiculous! We were able to borrow cheap short and invest long, we’re running a huge arbitrage, we’re making a fortune, this is the most profitable thing that ever happened to us!” – So you could tell the monetary policies and sort of insider games were just pumping profits into the bank at that time, so that was very profitable.

But of course the big money was used for a significant movement of the military abroad and into Afghanistan and then into Iraq … You could see that the country was being prepared to go to war. And sure enough, 9/11 was used as a justification to go to war in Afghanistan, to go to war in Iraq, and commit a huge number of actions, and now much of the challenges about the budget are the result of extraordinary expenditures on war including in Afghanistan and Iraq and the costs of moving the army abroad and engaging in this kind of empire building with ground military force.

So I think if you ask Cui Bono on 9/11, one of the big categories was all the people who made money on engineering the popular fear they needed to engineer these wars. I believe whether it was financial fraud, engineering new laws or engineering wars, it was a fantastically profitable covert operation. [45]

In that category of people who benefit from 9/11 are also the arms manufacturer Raytheon, whose share price gained directly from the 9/11 attacks. Trading of the shares of Raytheon, the producer of Tomahawk and Patriot missiles (and parent company of E-systems, whose clients include the National Security Agency and CIA), experienced an abrupt six-time increase of call option purchases on the day immediately before September 11. [46]

The outright purchase of call options implies the expectation that a stock price will rise. In the first week after 9/11, when the New York Stock Exchange opened again, the value of Raytheon actually shot up considerably. Looking at the development of the stock price, the impression is a very weak performance before the attacks – and then, after resumption of trade, a “gap” (at substantial volume) upwards. In other words: just under $25 on September 10, the low in the period between August 20 to September 28, at $31, 50 on September 17 and up to $34,80 on September 27, 2001.

With regards to government bonds, buyers of US Treasury securities with a maturity of five years were also winners. These securities were traded in an unusually large volume shortly before the attacks. The Wall Street Journal reported at least in early October 2001 that the Secret Service had started an investigation into a suspiciously high volume of US government bond purchases before the attacks. The Wall Street Journal explained:

Five-year Treasury bills are the best investments in the event of a global crisis, in particular one like this which has hit the United States. The papers are treasured because of their safety, and because they are covered by the US government, and usually their prices rise if investors shun riskier investments, such as shares. [47]

Adding to this phenomenon, the government issues these bonds that serve as a basis of money creation for funding a war such as the immediately declared “war on terror”, engaging the Tomahawks from Raytheon. And here it may again be useful to have a quick look at the “cui bono” relationship:

The US Federal Reserve creates money to fund the war and lends it to the American government. The American government in turn must pay interest on the money they borrow from the Central Bank to fund the war. The greater the war appropriations, the greater the profits are for bankers. [48]

A multi-layered combination, one could say.

I also talked about the topic of 9/11 insider trading with one of the world’s leading practitioners at the interface between the international capital markets, the national security policy of the US as well as geopolitics, James G Rickards. He gave me some answers in a personal discussion, which I am allowed to repeat here with his expressed approval.

Question: Did suspicious trading activities of uncovered put options on futures markets occur shortly before 9/11?

James G Rickards: Well, the trading documents certainly look suspicious. It is simply a fact that an unusually high volume of purchases of put-options for the two airlines occurred over the three trading days before the attacks. This is a mere fact, no speculation, no guessing around. This is clearly obvious from the documents of the trading sessions on the derivatives exchanges.

Question: Do you think that the intelligence agencies could have got a warning signal based on this information?

James G Rickards: Theoretically that is possible, if are you are looking and watching out for this. But there was far more significant information, which was ignored.

Question: Do you also think that some people with foreknowledge operated speculatively in the option markets?

James G Rickards: Based on the documentation of the trading session it seems that this has been the case, yes.

Let’s sum up a bit at the end. We have, among other things:

The “nice detective work” by Kevin Ryan related to Stratesec/Wirt Walker III.

Some highly inconsistent information vis-a-vis Convar/illegal credit card transactions.

Scientific papers supporting the allegations that there were indeed unusual trading activities in the option market before the terrorist attacks of 9/11, although the 9/11 Commission (based on the investigation of the SEC and the FBI) ruled that possibility out.

As it became clear that I would publish this article here at Asia Times Online, I contacted the US Federal Bureau of Investigation via its press spokesman Paul Bresson in order “to give the FBI the opportunity to give a public statement with regards to three specific issues”. Those three specific issues were the ones I have just highlighted. Related to each of them I’ve asked Mr Bresson/the FBI: “Could you comment on this for the public, please?” Up to this moment, Mr Bresson/the FBI did not respond to my inquiry in any way whatsoever. Does this come as a surprise?

I’ve also got back in touch with “ars publicandi”, the firm that does public relations for Convar in Germany. The response said: “Unfortunately I have to inform you that the status has not changed, and that Convar considers the issue of 9/11 as dead in general.”

As you have read, the status in August of last year was slightly different.

At the end of this article, I should perhaps mention that this research ultimately led to negative consequences for me. After I contacted the FBI, I was informed by the publisher of a German financial website, for which I conducted interviews for a professional fee (and had already prepared more work), that no further cooperation was possible. Now that I will come in one way or another into the focus of the FBI, any association with me would be undesirable.

Well, you know the rules.

As far as the abnormal option trades around 9/11 are concerned, I want to give Max Keiser the last word in order to point out the significance of the story.

Max Keiser: Regardless of who did it, we can know that more than a few had advance warning – the trading in the option market makes that clear.


[1] Compare Michael C. Ruppert: “Crossing the Rubicon: The Decline of the American Empire at the End of the Age Of Oil“, New Society Publishers, Gabriola Island, 2004, page 152.

[2] Ibid., page 153.

[3] Ibid., page 154 – 155.

[4] Ibid., page 170.

[5] Ibid., page 238 – 253: “9/11 Insider Trading, or ‘You Didn’t Really See That, Even Though We Saw It.’“

[6] Ibid., page 239.

[7] Compare Chris Blackhurst: “Mystery of terror ‘insider dealers’”, published at The Independent on October 4, 2001 under:


[8] Compare “Profits of Death“, published at From the Wilderness on December 6, 2001 under:


[9] For the fact, that it was George Tenet who recruited Krongard, compare George Tenet: “At the Center of the Storm”, Harper Collins, New York, 2007, page 19.

[10] Compare Marc Chesney, Remo Crameri and Loriano Mancini: “Detecting Informed Trading Activities in the Option Markets”, University of Zurich, April 2010, online at:


[11] Nafeez M. Ahmed: „Geheimsache 09/11. Hintergründe über den 11. September und die Logik amerikanischer Machtpolitik“, Goldmann Verlag, Munich, 2004, page 182. (Translated back into English from German.)

[12] Compare Michael C. Ruppert: “Crossing the Rubicon“, page 244 – 247.

[13] Wing-Keung Wong, Howard E. Thompson und Kweehong Teh: “Was there Abnormal Trading in the S&P 500 Index Options Prior to the September 11 Attacks?”, published at Social Sciences Research Network, April 2010, under:


[14] Compare “Bank of America among 38 stocks in SEC’s attack probe”, published at Bloomberg News on October 3, 2001, archived under:


[15] Michael C. Ruppert: “Crossing the Rubicon“, page 243.

[16] Ibid.

[17] “Suppressed Details of Criminal Insider Trading Lead Directly into the CIA’s Highest Ranks”, published at From the Wilderness on October 9, 2001 under:


[18] Compare “Early September 2001: Almost Irrefutable Proof of Insider Trading in Germany”, published at History Commons under:


[19] Allen M. Poteshman: “Unusual Option Market Activity and the Terrorist Attacks of September 11, 2001”, published in The Journal of Business, University of Chicago Press, 2006, Vol. 79, Edition 4, page 1703-1726.

[20] Wing-Keung Wong, Howard E. Thompson und Kweehong Teh: “Was there Abnormal Trading in the S&P 500 Index Options Prior to the September 11 Attacks?”, see endnote 13.

[21] Ibid. The authors refer to Erin E. Arvedlund: “Follow the money: terrorist conspirators could have profited more from fall of entire market than single stocks“, published in Barron’s on October 8, 2001.

[22] Wong, Thompson, Teh: “Was there Abnormal Trading in the S&P 500 Index Options Prior to the September 11 Attacks?”

[23] Ibid.

[24] Ibid.

[25] Marina Alcaraz: “11 septembre 2001: des volumes inhabituels sur les options peu avant l’attentat”, published in Les Echos, page 34, September 10, 2001, online at:


[26] Marc Chesney, Remo Crameri and Loriano Mancini: “Detecting Informed Trading Activities in the Option Markets”, see endnote 10.

[27] Ibid.

[28] ibid.

[29] Ibid.

[30] Compare Marc Chesney, Remo Crameri and Loriano Mancini: “Detecting Informed Trading Activities in the Option Markets”, published at the University of Zurich on September 7, 2011 under: http://www.bf.uzh.ch/publikationen/pdf/2098.pdf

[31] Vgl. Lars Schall: “Sapere Aude!“, German Interview with Dr. Daniele Ganser, published at LarsSchall.com on August 18, 2011 under:


[32] Compare a copy of the letter by the SEC on MaxKeiser.com under:


[33] Compare related to this agreement Matt Taibbi: “Is the SEC Covering Up Wall Street Crimes?”, published at Rolling Stone on August 17, 2011 under:


[34] Mark H. Gaffney: “Black 9/11: A Walk on the Dark Side”, published at Foreign Policy Journal on March 2, 2011 under:


[35] Compare Peter Dale Scott: “Launching the U.S. Terror War: the CIA, 9/11, Afghanistan, and Central Asia”, The Asia-Pacific Journal, Vol 10, Issue 12, No 3, March 19, 2012, online at: http://japanfocus.org/-Peter_Dale-Scott/3723

[35] Erik Kirschbaum: “German Firm Probes Last-Minute World Trade Center Transactions“, published at Reuters on December 19, 2001, online at:


[36] Ibid.

[37] Ibid.

[38] Michael C. Ruppert: “Crossing the Rubicon“, page 244.

[39] Ibid., page 423.

[40] Ibid., page 423 – 426.

[41] Commission Memorandum: “FBI Briefing on Trading“, dated August 18, 2003, page 12, online at: http://media.nara.gov/9-11/MFR/t-0148-911MFR-00269.pdf

[42] Lars Schall: “9/11 Was A Fantastically Profitable Covert Operation”, Interview with Catherine Austin Fitts, published at LarsSchall.com on September 3, 2011 under:


[43] Ibid. Compare further related to the “cui bono“ topic Catherine Austin Fitts: “9-11 Profiteering: A Framework for Building the ‘Cui Bono?’“, published at GlobalResearch on March 22, 2004 under: http://www.globalresearch.ca/articles/FIT403A.html

[44] Lars Schall: “9/11 Was A Fantastically Profitable Covert Operation”, see endnote 42.

[45] Compare “Bank of America among 38 stocks in SEC’s attack probe”, see endnote 14. “A Raytheon option that makes money if shares are more than $25 each had 232 options contracts traded on the day before the attacks, almost six times the total number of trades that had occurred before that day. A contract represents options on 100 shares. Raytheon shares soared almost 37 percent to $34.04 during the first week of post-attack U.S. trading.”

[46] Compare Barry Grey: “Suspicious trading points to advance knowledge by big investors of September 11 attacks”, published at World Socialist Web Site on October 5, 2001 under:


[47] J. S. Kim: “Inside the Illusory Empire of the Banking Commodity Con Game”, published at The Underground Investor on October 19, 2010 under:


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Citing Ruppert as a reliable source it like hiring a child rapist to run a kindergarten


Gee I know of no connection to child molestation and Ruppert. PLEASE INFORM US OF THIS.

This is an odd comment and focus. Why do you bring this up ??

I do know that there was a hint of CHILD molestation of a former GG ALLIN

associate who went to Brazil to have sex with 14 year old boys.




(from interview)

GG: He had a girl and... I wanna say one thing about Bill Webber that I forgot to say in Detroit. Bill Webber got the Len Colby award.

Evan: The Golden Len Colby award.

GG: The Golden Lenny award for the most xuck-ups on one tour.

Evan: Lenny is now in Brazil having sex with 14 year old boys or something, we hear.

GG: I'm jelous.


An Irresponsible Response




Debunking Joseph Nobles: 7 Problems With 7 Responses




9/11 Truth Now




main site



Edited by Steven Gaal
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Citing Ruppert as a reliable source it like hiring a child rapist to run a kindergarten


Gee I know of no connection to child molestation and Ruppert. PLEASE INFORM US OF THIS.

This is an odd comment and focus. Why do you bring this up ??

I do know that there was a hint of CHILD molestation of a former GG ALLIN

associate who went to Brazil to have sex with 14 year old boys.




(from interview)

GG: He had a girl and... I wanna say one thing about Bill Webber that I forgot to say in Detroit. Bill Webber got the Len Colby award.

Evan: The Golden Len Colby award.

GG: The Golden Lenny award for the most xuck-ups on one tour.

Evan: Lenny is now in Brazil having sex with 14 year old boys or something, we hear.

GG: I'm jelous.


An Irresponsible Response




Debunking Joseph Nobles: 7 Problems With 7 Responses




9/11 Truth Now




main site



In your 30 years or so of formal education didn’t ever learn how analogies work? If I say ‘bullets are to guns as arrows are to bows’ I’m NOT implying you can fire a bullet with a bow. Ruppert, one of Scott’s main sources, has been shown to be highly unreliable in the past.

Can’t you do any better than stooping to personal attacks? Johnson was wrong they are a step or to below patriotism in scoundrels’ arsenals. Evan’s comment was obviously in jest but you can keep dredging it up. But let’s say it was true, how would that undermine any points I’ve made on this or anyother threads?

WTF does the collapse of 7 have to do with insider trading? I guess Fetzer was right, trying to change the subject is a tactic used by someone loosing an argument.

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Colby wrong on insider trading foreknowledge 911.





http://www.kpfa.org/archive/id/76605 audio talk


Guns and Butter, for January 4, 2012 - 1:00pm

Click to Play:

Download this clip (mp3, 10.28 megabytes)

Play this clip in your Computer's media player



Guns and Butter

"Evidence of Insider Trading Before 9/11" with Paul Zarembka. Informed Trading; Insider Trading; Put Options; The Journal of Business; The 9/11 Commission Report; three scientific studies on insider trading; Professor Potasman Study from the University of Illinois, Urbana-Champaign; Open Interest; Exercising Put Options; Quintile; Hedging; University of Wisconsin, Madison Study; Chesney Study; Conclusion.


BTW Though in GG Allin interview some jokes. We only have your word thats its in jest......

================================= Colby fail Oh yeah then Colby says LOL.

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Colby wrong on insider trading foreknowledge 911.



There is quite a large difference between saying a researcher, who has made himself a public figure, is unreliable and accusing someone on a forum of having sex with young boys, Gaal strikes out once again, they should induct him into the Boobball Hall of Infame+


BTW Though in GG Allin interview some jokes. We only have your word thats its in jest......

================================= Colby fail Oh yeah then Colby says LOL.


That should be obvious to anyone with more brain power than a cherry tomato, not sure if you qualify. But as stated above even IF true it would not refute any claims I’ve made here.



http://www.kpfa.org/archive/id/76605 audio talk


Guns and Butter, for January 4, 2012 - 1:00pm

Click to Play:

Download this clip (mp3, 10.28 megabytes)

Play this clip in your Computer's media player



Guns and Butter

"Evidence of Insider Trading Before 9/11" with Paul Zarembka. Informed Trading; Insider Trading; Put Options; The Journal of Business; The 9/11 Commission Report; three scientific studies on insider trading; Professor Potasman Study from the University of Illinois, Urbana-Champaign; Open Interest; Exercising Put Options; Quintile; Hedging; University of Wisconsin, Madison Study; Chesney Study; Conclusion.

“Paul Zarembka… Research Interests -Marxist Theory -U.S. Labor History -Economic Development” Nothing in his CV suggests the slightest expertise in financial markets. Get back to us with links to the supposed studies that supposedly support his views.

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COLBY// That should be obvious to anyone with more brain power than a cherry tomato, not sure if you qualify. But as stated above even IF true it would not refute any claims I’ve made here.


GAAL RESPONDS// Colby started a thread about a 911 Truther's drug arrest. Gee how would that affect any claims he made ?? NOPE, COLBY FAIL. == COLBY vs COLBY again.


COLBY// Get back to us with links to the supposed studies that supposedly support his views.









Evidence of Insider Trading before September 11th Re-examined


This report addresses evidence of insider trading before September 11th, sometimes referred to by a broader phrase, informed trading. Insider trading refers to using private

knowledge of an anticipated event in order to profit financially by engaging in financial market transactions. In the first weeks after September 11, 2001 a number of financial publications called attention to substantial insider trading in put-options occurring before the attacks. Some of these early examples have been surveyed in Zarembka (2008, pp. 64-66, 69-71), while this book chapter also commented on certain exaggerations (e.g., an incorrect doubling of the put-option volumes). Quickly, commentary died out.

Purchasing a put option entitles the owner to sell a stock at a contractually stated price, the “strike price”, any time until the contract expires. If the market price of the stock goes down below the “strike price”, the owner of the put-option can buy the stock (if not already owned) and simultaneously sell the same stock at that “strike price”, making a profit if the cost of the option itself does not exceed the net revenue.

This report deals with evidence of insider trading only. It does not deal with speculations. Nor does it deal with certain open questions about financial issues surrounding September 11th that otherwise deserve investigations:

•Large increases in the M1 money supply in the United States have been reported for July and August 2001 and explanations have been sought.

•Huge financial transactions have been reported to have taken place at computers at the World Trade Center minutes before the attacks.

•Selling short (borrowing a stock and selling it, then returning it later through purchasing).

•Markets outside the United States.

•Disappearances of gold and securities from the World Trade Center.

•The specific financial firms directly hit by planes, and the financial investigations sabotaged by the WTC or Pentagon attacks.

•Insurance payoffs, particularly to the owner of destroyed buildings, particularly to Larry Silverstein.

This is not a complete list of issues deserving investigation and our contribution can be considered modest at best, compared to these additional questions. However, some of the above seem to have only one testimonial behind them. And we are addressing what the 9/11 Commission, however imperfectly, addressed.

In 2004, the 9/11 Commission Report (http://www.9-11commission.gov/report/911Report.pdf, p. 499, fn. 130) stated that the government’s investigations had produced no evidence of insider trading before the attacks. Yet, it offered little of its evidence to the public. When a FOIA request asked for the documentary evidence behind that Commission footnote we just mentioned, the SEC even replied on December 23, 2009 that “the potentially responsive records have been destroyed” (http://maxkeiser.com/wp-content/uploads/2010/06/FOIAresponseGIF1.gif). Such a response is all the more curious, given documents we report below that were made public on January 14, 2009, documents that would have provided at least a partial response to the request made.

•A scholarly article by Poteshman (2006) in the Journal of Business, using econometric modeling, claimed high probability of insider trading for American Airlines and United Airlines put-option purchasing shortly before September 11th. Were they random, the American purchases had only a 1% probability of occurrence; the United Airlines put-option purchasing was less improbable, but on September 6 had only a 4% probability of occurrence (both measures obtained by comparisons of the airline values reported on p. 1720, Table 4, to the benchmark values reported on p. 1713, Table 1).

Since the government had provided so little evidence of its position, some sharp criticism and reference to Poteshman’s results ensued (e.g., Griffin, 2005, pp. 52-57 and Zarembka, pp. 67-69).

Limited SEC Investigative Evidence Made Public

On January 14, 2009, two post-September 11th SEC investigating memos were finally made publicly available. 1`

The simpler one, prepared on May 11, 2004 for the 9/11 Commission, stated that the volume of put-option trades for United on September 6, 2001 (for a $30 strike price with expiration on October 20, 2001) had been erroneously reported in the SEC data: the correct value should have been 1500 – i.e., for 150,000 shares – not 2000. The memo explained that the SEC had missed the actual cancellation of an intended 500 put sale (included, but not a purchase). The Option Clearing House (OCC) had the correct number (http://media.nara.gov/9-11/MFR/t-0148-911MFR-00138.pdf 2

Still, judging by the reported change the next day in open interest (open interest is the amount of the put contract remaining unexercised), a 500 purchase did indeed occur on September 7. In other words, a volume of 2000 occurred over two days, not one day (1500, then 500). This would not seem to affect Poteshman’s work since he used the change in open interest for his measure rather than volume data, but it does raise a general concern about the SEC data. A volume level of 2000 for the first day does appear both in Zarembka (p. 66) and in Chesney, et al. (2010, p. 35, Table 2) and is implicitly retained in the Commission’s own report despite that 2004 memo it had received (Zarembka, p. 68).

Much more important, another memo was simultaneously released that had been prepared back on September 17-18, 2003 and had named the Options Hotline newsletterand its editor Steve Sarnoff as responsible for faxing on September 9, 2001 some 2000 subscribers the recommendation to buy put options on American Airlines (http://media.nara.gov/9-11/MFR/t-0148-911MFR-00139.pdf, p. 14). The memo further stated that the SEC interviewed 28 people who purchased these options and 26 had said that they had done so because of the newsletter. This memo reported 27 additional subscribers, not interviewed, as additional purchasers of that put option.

The same memo went on to report that an unnamed large institutional investor in hedge funds had undertaken the 2000 United put-option purchases – i.e., for 200,000 shares – but was explained away by the fact that the same investor had also purchased 115,000 shares of American stock on September 10. This information does appear in the Commission’s report, p. 499, fn. 130.

A third memo for the 9/11 Commission, this one dated April 24, 2004, reported an interview with Ken Breen, Deputy Chief, Business and Securities Fraud Section, Department of Justice. It is also important. It reports that Breen “was not sure about potential trading in index futures (because the volume is so great that analysis proved impossible)” (http://media.nara.gov/9-11/MFR/t-0148-911MFR-00074.pdf). In other words, the exhaustive governmental investigation was not so exhaustive after all, by its own admission.

A Contradiction and Its Deepening

Through the above, we have arrived at a contradiction: an econometric result of high probability of insider trading in American Airlines stock and somewhat less for United stock goes against the government’s September 2003 memo (released in 2009). This contradiction could be resolved by simply claiming that Poteshman himself never claimed certainty and then to assert that an event of low probability had been all that had occurred. Were such simplicity available!

Two other econometric studies have since been added to the scientific literature.

•Wong, et al. (2011) examined put options on the S&P 500 and found additional econometric evidence of insider trading before September 11th, now for the index the government had reported in April 2004, “analysis proved impossible”. Furthermore, the result is significant because some have speculated that option trading was heightened in the period before September 11th because of a falling market. As we will explain below, Wong obtained their results, even after trying to account for a falling market.

•Chesney, et al. (2010, yet unpublished) have studied about 1.5 million put-option trades for 14 companies: 5 airline companies including American and United, 5 bank stocks, and 4 others, for the period of January 1996 to April 2006. They report, with high probability, informed trading before September 11th in each of the put options for Boeing, Merrill Lynch, J.P. Morgan, Citigroup, United, American, Bank of America, Delta, and KLM (ordered here from the highest calculated gains downward).

In sum, ten financial instruments, including the S&P 500 option, are each exhibiting, with high statistical probability, evidence of insider trading before September 11th, sometimes more than once. American and United are identified by separate methodologies, seven additional companies are identified by Chesney, and the S&P 500 is identified by Wong. The joint probability of all of these being nothing more than random outliners seems astronomically low.

The government, however, had deepened its position. In that September 17-18, 2003 memo, the SEC refers to investigations of “103 companies and 38 index products and broad-based funds” (p. 3). It finds no evidence of any insider trading. It dismissed dramatic comments shortly after September 11th, even by a person as well positioned as the German Central Bank President Ernest Welteke (pp. 10-12). The report definitively concludes with the SEC’s lead investigator Joseph J. Cella, III, Chief of Market Surveillance, Division of Enforcement, SEC, saying that “he has no questions about any trade and is confident there was no illicit trading pre 9/11 in the United States” (p. 19).

The sharp contradiction between the scientific results and the government’s position is too great to ignore. Can it be resolved? On the one hand, are three distinct econometric methodologies implemented with option trading data each erroneous in some manner? Is the competence of the econometricians, including two articles having been screened through peer review evaluations, to be in question? On the other hand, if the SEC is accurately reporting the motivating factors about American and United put-option purchases, could the SEC be erroneous about many or all of the other financial instruments for which no evidence has been made public? Having repeatedly said that the attacks were a complete surprise, has the government been influenced to avoid acknowledging any insider trading before September 11th? Worse, is it aware of insider trading and is it lying?

Analysis: The SEC Evidence regarding One Named Financial Advisor

The tip that Steve Sarnoff, editor of Options Hotline, offered subscribers on September 9 for placing put options on American Airlines is reported by Mike Williams. 3 Nothing appears unusual with the recommendation itself. From the government’s memo, somewhat more than 50 of 2000 subscribers seem to have acted upon the recommendation – i.e., about two and one-half percent. Nothing appears unusual with this outcome. The 1312 change in open interest on September 10th (Chesney, p. 35, Table 2) represents an average of a bit less than 26 put-options purchases per subscriber who purchased, representing 2600 shares each. Yet, consider the implications of taking this at face value.

Joe Duarte, another financial advisor, lists ten newsletters dealing with option trading (www.joe-duarte.com/free/directory/options-newsletters.asp). Options Hotline does not happen to be one of them, perhaps suggesting that Sarnoff has no dominance. Search the web and get many more. Recommendations are being made by newsletters daily, weekly, monthly. If two to three percent of subscribers are following recommendations to buy put options on stocks, we should see many, many examples similar to what occurred for American on September 10, 2001. Therefore, what happened that day for American would be a rather common event, not a very unlikely one. That volume on American put options would not have shown up as unlikely, as a statistical matter.

Absent informed trading, newsletters should be nothing more than instruments, rather than causes, of these market behaviors being analyzed.

It is not only American, but, as we have seen, nine other put options showing spikes before September 11th. Chesney find only 37 such examples in a decade of some 1.5 million pieces of put-option data on fourteen companies, 13 of which were related to September 11th. These spikes should have been innocent of ex post shock events because spikes are to be always expected in random statistical outcomes. Instead, most are centered prior to shock events.

Two Caveats

Let me put one consideration to rest. Some critics of the 9/11 truth movement, such as Kay (2011), claim that the entire movement is filled with people who go down a rabbit hole, never willing to leave it. In this case, the suggested claim could be that Sarnoff himself should be added to a conspiracy about 9/11, added as soon as the government released in January 2009 its evidence as to who made what recommendation and with what effect regarding American on September 10. Such an approach would address the contradiction we have identified. But it would be at the expense of having no evidence for such an assertion.

We wish to stay with evidence, evidence from the econometricians, the government, and anywhere else obtainable. In other words, we wish to push into the contradiction.

Regarding evidence we have to be careful. For Boeing, Mike Williams, seeking to expose myths among skeptics of the official story of September 11th,, cites a Dutch article of September 11, 2006 placed on the site physics911.net (www.911myths.com/index.php/Put_Options#Boeing, accessed August 4, 2011). This article had made only a tangential mention to this airline manufacturer, thus representing no more the proverbial “straw man” – a data source is not even provided. Williams then provides a news report referring to one analyst’s public downgrading of Boeing on September 7th, apparently being unaware that put-options purchases cited by Poteshman were on United occurred on September 6th (as well as in Chesney as we shall see below).4

Among known skeptics of the official 9/11 story, discussion of option transactions at a site hosted by Jim Hoffman (http://911research.wtc7.net/sept11/stockputs.html, accessed August 4, 2011) is embarrassingly out of date, mostly refers to 2001 stories, even though claiming an August 2007 update. Kevin Ryan (2010), followed by Mark Gaffney (2011) whose book Black 9/11 is due for release shortly, each attempt a recent survey, but seem unaware of the Commission documentation on insider trading released in January 2009.

Discerning Evidence of Insider Trading before September 11th

We now proceed to describe each of the econometric studies, the first being single-authored and the following two being triple-authored. The two first have been peer-reviewed and published in well-established journals, the third is planned for submission shortly, and has been a lengthy work-in-progress.

The article by Poteshman in the Journal of Business well describes the problem at hand, and is applicable to all three works. Hinting at the end about his two-pronged approach that we will mention later, Poteshman writes that, in general, option market activity

is motivated by a number of factors such as uninformed speculation (i.e., noise trading), hedging, trading on public information, and trading on private information. Consequently, when a statistic obtains a value that is extreme relative to its historical distribution, one can infer that there was an unusual amount of activity related to one or more of the option trading motivations. Although the statistics do not distinguish between trading motivations, if an extreme value is observed just before an important piece of news becomes public, then it is reasonable to infer that there was option market trading based on private information rather than a shock to the trading from one of the other motivations. Indeed, the fact that the statistic has obtained an extreme value indicates that a shock to trading from another motivation would have to be unusually large to account for the observed option market trading. Of course, it is possible that the typical option trading from the other motivations varies systematically with changes in the state of the option or underlying security market. This is the reason that conditional as well as unconditional distributions for the statistics will be computed in the next section. (Poteshman, 2006, pp. 1711-12)

Analysis: The Econometric Evidence in Poteshman

Each of the papers we cite has reference to data as quantiles. Quantiles are defined by the accumulation of the probabilities of occurrences of a random variable. A quantile at 50% would say that one half of the occurrences of random variable had already occurred over the frequency distribution and one half have yet to occur. A quantile at 95% would say that 19 out of 20 occurrences of the random variable had already occurred with 1 in 20 yet to occur; a quantile at 99% would report 99 out of 100 had already taken place. Thus, an event at a quantile of 95% would be rare, while at 99% would be quite rare.

Poteshman’s work examines several measures for the probabilities of insider trading occurring, while addressing market options for American Airlines, United Airlines, the index for airline stocks, and the S&P 500. I summarize the easiest one of three to understand and the one he seems most comfortable exploring, i.e., the evidence regarding volumes of put-option contracts. This is measured by the change in a contract’s open interest from one day to the next day (purchases less sales less exercises of options) compared to the average of such change measured by a 126 trading day period, going backwards in time from 22 trading days before the date in question. This is also normalized for the standard deviations of those 126 trading days. The statistical results for the four trading days before September 11th are reported in Table 1.

Table 1: Put-Option Market Volume Statistics before September 11th

Volume Statistics Sept. 5

Sept. 6

Sept. 7

Sept. 10











Airline Index





S&P 500





Source: Poteshman (2006, pp. 1720, Table 4)

Poteshman compares these AMR and UAL statistics to his benchmark data for the 1,000 largest market capitalization firms for the dates from January 2, 1990 through September 4, 2001. Compared to the historical record of the large companies, the AMR datum for September 10th in the table has only a 1% probability of occurrence and the UAL datum of September 6 has a 4% probability of occurrence. The airline index datum for September 6th has a 6% probability of occurrence and the S&P datum for September 7th, a 5% probability.

Poteshman also considers a four-trading day interval in addition to the daily values we report in Table 1. For those who consider this measure to be more appropriate, probabilities are somewhat less unlikely. In any case, the above results are not conditional upon any underlying factors and so Poteshman also introduces four conditioning factors, “total option volume, the return on the underlying asset, the abnormal trading volume of the underlying asset, and the return on the overall stock market” (p. 1716). He undertakes quantile regressions for these four factors. He obtains very similar results.

Analysis: The Econometric Evidence in Wong, et al.

The article by Wong et al. (2011, pp. 7-9) has the most detailed discussion of executions of option trading generally. It then undertakes a complex statistical investigation regarding S&P 500 option trading before September 11th, centering not only upon put options – whether they were purchased in-the-money (above the market, and thus costing a higher price), at-the-money (at the market level), or out-of-the-money (below the market). They also consider the type of strategy used, and also call options. Calls are the contractual right to purchase stocks for a determined “strike price” before an expiration date. They are a less obvious strategy for anticipating a decline in an asset price.

Wong, et al., first contrast the 2001 period for contracts expiring on September 22, 2001 with the same September expiration in 2000, both being in declining market environments: for the period between January 1 and June 30, 2000, the S&P 500 declined 15 points, while for the period January 1 to June 30, 2001, the S&P 500 declined 96 points. They consider these as “control periods” (pp. 15-16). They find that “the trading volume for the SPX index put options during the control periods [i.e., January 1 to June 30] is not significantly different between 2001 and 2000 … the years 2000 and 2001 being similar in regard to option activity in a time period before intense trading began in September index put options” (p. 37).

Furthering the comparison of 2001 to 2000, they examine a short sub-period after the S&P 500 closed at 1134 on August 31 to September 10, 2001 when it closed at 1093, a decline of 39 points in five trading days. A year earlier, the S&P 500 had closed at 1518 on August 31, 2000, while on September 8 (September 10 was a Sunday) it had closed at 1495, a decline of 23 points, also in five trading days. They find that “the mean and the standard deviation of the trading volumes for September 2001 contracts were more than double those for September 2000 contracts during sub-period [september 1 to September 10] for both call and put, but not so much during the other sub-periods” (p. 20). They also find many more extreme volumes in the 2001 period.

They then investigate the various types of puts and calls able to be utilized, and also consider alternative strategies. Studying statistical results, they conclude that their findings show

a significant abnormal increase in the trading volume in the option market just before 9-11 attacks in contrast with the absence of abnormal trading volume far before the attacks. This only constitutes circumstantial evidence that there were insiders who tried to profit from the options market in anticipation of the 9-11 attacks. More conclusive evidence is needed to prove definitively that insiders were indeed active in the market. Although we have discredited the possibility of abnormal volume due to declining market, such investigative work would still be a very involved exercise in view of the multitude of other confounding factors e.g. coincidence, confusing trading strategies intentionally employed by the insiders, noises from the activities of non-insiders. (p. 44)

They do not claim definitive results, but rather significant statistical evidence of insider trading. Their procedure attempts to abstract from the fact of a declining overall market, an element that some have attempted as a basis for a counter-claim against evidence of insider trading. A counter-argument could begin by observing that August was an up-market in 2000 and down-market in 2001. We have not yet found relevant evidence about option market behaviors in down markets compared to up markets, so we merely state that no presumptions should be made without evidence.

Wong et al. do not attempt to compare their results with Poteshman’s regarding the S&P 500. Poteshman had noted the fact that “the option volume on SPX options was more than 100 times greater than that on either AMR or UAL options. Consequently, it would be much more difficult to detect an option market bet …” (p. 1723). Wong, et al., concur: “any 9-11 insider would not trade directly the airline options in large volume to avoid drawing attention after the 9-11 attacks”. Since Wong et al. is a much more elaborate analysis for the S&P 500, we are entitled to infer that theirs is a more discriminating analysis.

Analysis: The Econometric Evidence in Chesney, et al.

Chesney, et al., offer the most detailed pieces of evidence. To understand what they are offering, first consider American Airlines (AMR) for the authors’ time period of January 1996 to April 2006. It is representative of their general methodology and they provide details for this particular example of so much concern within the 9/11 movement. Technical details are placed in footnotes as we move toward our Table 2 presentation of their results.

Chesney, et al., start with the 137,000 AMR put-option contracts, i.e., about 54 possibilities per trading day over the ten-plus years of data they analyze (about 250 trading days per year). They first identify for each day that put-option contract across strike prices and expiration dates with largest increment in open interest. These 2560 data points are the more unusual. After accounting for intraday speculation , they record the prior two years of data for each time t, beginning in January 1998 and ending in April 2006. This leads to a measure qt, that denotes, for date t, the frequency such a value occurred based upon the prior historical record. They are referred to as probabilities(p. 9). For the AMR option on September 10, as one example, qt is reported as 1.2% (p. 35). This reflects 6 occurrences in the two years of 500 data points on and before that day. Generally for their study, qt must refer to data that had occurred no more than 5% of the time, i.e., no more than 25 times for the prior two years .

A second, additional criterion attempts to account for hedging transactions – buying a put option to guard against a fall in an existing stock position, or buying stock to guard against a fall in a put-option’s value as the stock rises. They offer a rather complicated procedure, not elaborated here. The two criteria, as they report, reduce the considered spikes for AMR put options down to 141 instances (p. 17), still fairly considerable.

Instead of stopping here, as a third criterion, Chesney, et al., focus upon the most profitable, using ex post information on the behavior of the stock price. Let rt be the option’s return at time t. The maximum return over the available contracts after time t is then represented by rtmax. AMR on September 10th had a put-option contract price of $2.15 for a $30 strike price and October 20, 2001 expiry. The maximum gain for that contract therefore turned out to be that exercised on September 17 as the stock price fell to a $18 close and the option price rose to $12, a $12 gain per contract on $2.15 invested, or 453%. That particular rtmax is reported in Chesney (p. 35, Table 2; also, p. 22 with a typo of 458%).

Now, this third criterion is formulated as a pair of conditions that are presented here in a footnote . The introduction of this third criterion leads to only 5 incidents for AMR: May 10 and May 11, 2000, August 31 and September 10, 2001, and August 24, 2005, rather than 141 without this third criterion.

For the entire set of fourteen companies studied, only 37 incidents are identified: 13 spikes identifiable before September 11th as reported in Table 2, 14 associated with earnings announcements (all but 4 beforehand, 2 on same day, 2 after), 6 associated with mergers and acquisitions (4 beforehand, 2 same day), and 4 not identified. In other words, spikes are being shown to relate to real events, most frequently anticipating them.

The gains from exercising put options, reported in Table 2 for the 13 identified cases of informed trading before September 11th, do not depend upon the econometric procedure, but rather are factually based, close to the maximum possible. As seen, American purchases on September 10th are by no means the most profitable. The Merrill Lynch put-option purchase generated almost four times the subsequent gains as that for American. The extensive put purchases for Boeing were even more profitable. It could have been background for Sarnoff’s September 9th recommendation to his subscribers regarding American. That is, an option advisor’s knowledge of prior airline put-option purchases by others may be suggestive for his or her own recommendations. If the advisor turns out to be wrong, an explanation is at hand: “I was not alone”. In other words, evidence on American such as Poteshman’s and Chesney, et al.’s may not itself represent of insider trading at all. If correct, those other put options trades require the particularly careful investigations. Indeed, if a person actually had prior information about what was to happen on September 11th, why would he or she engage in put-option purchasing for the most obvious of choices, American and United, and subject himself or herself to easy detection?

Table 2: Evidence of Informed Put-Option Purchases before September 11th

Put Option 2001 Date

Change in open interest

Gain from exercising the put options

Proxy for probability as an informed trade


29 Aug





5 Sep





6 Sep




Merrill Lynch

10 Sep




J.P. Morgan

30 Aug




J.P. Morgan

6 Sep





30 Aug





6 Sep





31 Aug





10 Sep




Bank of America

7 Sep





29 Aug





5 Sep




Source: Chesney, et al. (2010, p. 35, Table 2 and p. 38, Table 4)

What the prior paragraph is suggesting is that spikes in put-option purchases are not independent events, but, in actuality, can be interrelated. We would thus have to pull back from a conclusion of having ten random pieces of data and then claiming the joint probability of their occurrences to be “astronomically low”. The joint probability would still be very low, but not “astronomically low”. In this case, Boeing put-option purchasing moves to the center of attention, not just for the magnitude of profits reported in the table, but as possible background leading to put-option purchasing on American a few days later.

As to the United put-option purchasing, the SEC reports that it was related to a large stock purchase of American stock by the same investor. Poteshman did not find the option purchase to be highly improbable on a random basis. Chesney, et al.’s procedure for delimiting hedging transactions would not capture such an example of purchasing American stock while also purchasing put-options on United.

In sum, we are willing to accept the SEC’s reporting about American and United Airlines and not consider them to represent evidence of insider trading. Nothing else do we accept, as these have been the only pieces of evidence on the issue of insider trading put forward publicly from SEC investigations. Specifically, Boeing as well as Merrill Lynch, J.P. Morgan, Citigroup, and Bank of America deserve careful attention as a result of Chesney, et al.’s work. Nevertheless, we have been warned regarding what can be held back by the government and then released years later (cf. American). Should the movement for discovering the truth about September 11th jump too quickly with accusations, it can backfire.

The total gains without United and American reported in Table 2, and then also including other individual stocks not yet analyzed by Chesney, should fall short of $30 million in total. This level is reported in order to keep in mind the maximum potential of insider put-option trading benefits before September 11th. We are not claiming that that much actually occurred. Insider trading could have occurred in individual stocks as Chesney, et al., find, and also served as unsuspecting background to investors and their advisors for United and American put-option purchases.

Boeing, Merrill Lynch, J.P. Morgan, Citigroup, and Bank of America

For Boeing, Merrill Lynch, J.P. Morgan, Citigroup, and Bank of America we have been unable to find public news motivating large put-option purchases for them before the dates found in Chesney, et al.’s research. Note that the cited downgrade of Boeing (see http://community.seattletimes.nwsource.com/archive/?date=20010908&slug=boeing08, accessed August 20, 2011) came after the dates cited.

In any case, research work by Chesney, et al., fails to suggest spikes in put-option trading occurring merely due to rating changes by analysts of corporations. Indeed, 33 of theirs are associated with September 11th, or earnings announcements, or mergers and acquisitions; only 4 remain unidentified.

Concluding Recommendations

•United and American ought not be recognized as direct insider trading. Nevertheless, by themselves, they convey little of the larger question.

•Ken Breen, Department of Justice, reported to the Commission in another interview released in 2009 that, for put-options on indexes, “the volume is so great that analysis proved impossible”. Therefore, Wong’s result regarding the S&P 500 is not contested in the background reports to the 9/11 Commission, despite what the Commission asserted. This fact needs to be asserted.

•To the best of my knowledge, none of the three econometric methodologies and results has been contested in the professional literature. Typically, controversial results generate opposition. We have attempted to convey enough of three separate methodologies to be convincing that they are solid scientific works. Therefore, accept the econometric research results as meritorious.

•Demand that the SEC publicly report the details of its findings on Boeing, Merrill Lynch, J.P. Morgan, Citigroup, Bank of America, Delta, and S&P 500 index put-option trading before September 11th. This reporting should be at least as detailed as that already released for American and United.

•Add to that demand of the SEC any additional corporations exhibiting evidence of insider trading before September 11th, e.g., in the expanded material Chesney, et al., plan to release shortly.

In addition:

•Promote an independent investigation into the events of September 11th, inclusive of subpoena powers, that includes investigations of put-option purchasing.

•Incorporate into that independent investigation the financial issues we have cited, but not examined, in our introduction, most of them having billions of dollars at stake.


Arvedlund, Erin E. (2001), “Follow the Money: Terrorist conspirators could have profited more from fall of entire market than single stocks”, Barron’s, October 8.

Chesney, Marc (2010), Remo Crameri, and Loriano Mancini, “Detecting Informed Trading Activities in the Options Markets”, April 15, 2010, at SSRN: http://ssrn.com/abstract=1522157.

Gaffney, Mark H. (2011), “Black 9/11: A Walk on the Dark Side” (Second in a series), Foreign Policy Journal, March 2, at www.foreignpolicyjournal.com/2011/03/02/black-911-a-walk-on-the-dark-side-2/0/, accessed August 5, 2011.

Griffin, David R. (2005), The 9/11 Commission Report: Omissions and Distortions, Northampton, MA: Interlink.

Kay, Jonathan (2011), Among the Truthers, Toronto: HarperCollins.

Poteshman, Allen M. (2006), “Unusual Option Market Activity and the Terrorist Attacks of September 11, 2001”, Journal of Business, Vol. 79, pp. 1703-1726.

Ryan, Kevin (2010), “Evidence for Informed Trading on the Attacks of September 11”, Foreign Policy Journal, November 18 , at www.foreignpolicyjournal.com/2010/11/18/evidence-for-informed-trading-on-the-attacks-of-september-11/, accessed August 5, 2011.

Wong, Wing-Keung, Howard E. Thompson, and Kweehong The (2011), “Was there Abnormal Trading in the S&P 500 Index Options Prior to the September 11 Attacks?”, Multinational Finance Journal, Vol. 15, no. 1/2, pp. 1–46 at http://mfs.rutgers.edu/MFJ/Articles-pdf/V15N12p1.pdf.

Zarembka, Paul (2008), “Initiation of the 9-11 Operation, with Evidence of Insider Trading Beforehand”, The Hidden History of 9-11, P. Zarembka, editor, New York: Seven Stories Press, 2nd edition, pp. 47-74 (1st edition, Amsterdam: Elsevier Press, 2006).

1 The January 14, 2009 date was reported to this author on July 25, 2011 by Kristen Wilhelm of the Center for Legislative Archives as follows: “The 9/11 Commission's Joseph Cella Memoranda for the Record were scanned and uploaded to the NARA Archival Research Catalog for the opening of the 9/11 Commission records on Jan. 14, 2009.” See also the NARA prior notice of the general opening at www.archives.gov/press/press-releases/2009/nr09-41.html. It may be of some interest that attention was drawn to this release on the very day of January 14 (see the January 15 posting at http://screwloosechange.blogspot.com/2009/01/more-on-911-put-options.html, and its link to postings on January 14 at http://forums.randi.org/showthread.php?t=132904&page=2, both accessed August 12, 2011. Thanks are offered to “lapman” and “Mike W” – the latter being presumably Mike Williams given his later reference to this release). Williams receives further attention in the course of this article.

2 Another 75 trade is also cited for another contract not in contention.

3 This recommendation was for the put-option contract with a $30 strike price to expire on October 20, 2001. It read as follows:

September 9, 2001

Vol. 12, No. 28

Stocks Skid On A Jump In The Jobless Rate. This Week, We Take To The Air

This past week, stocks were pressed to the downside – with the highlight being Friday's blue chip decline. Wall Street was surprised by a spike, to a four-year high, in the jobless rate. And the market took its lumps. This week, I see opportunity for you to have fun and profit with an airline play. So, without further ado, here's…

This Week's Option Recommendation

Buy the AMR October $30 put for $170 [100 shares for $1.70 per share, P.Z.], or less, good this week.

Shares of AMR Corp. trade on the New York Stock Exchange under the symbol "AMR". The symbol for this option reco is "AMRVF". American Airlines closed the week at $30.15. The 52-week range for AMR is $27.62-$43.93. My downside price target is $22-$26.

The major airline is under pressure. At $25, each $30 put would have $500 of intrinsic value. If AMR is at or above $30 on the third Friday in October, your option will expire worthless. That is your risk. Set your stop-loss at $100, to preserve capital, in case my expectations go awry.

That's buy the AMR October $30 put for $170, or less, good this week.

– www.911myths.com/index.php/Put_Options#Options_Hotline , accessed 719/2011

4 Within the same discussion, Williams cites many reports of put-option volumes without those using accurate data. Some reported data are about double the actual levels, presumably due to author errors in understanding Optionmetric data which considers the buy and sell sides of one transaction to be distinct. If one is going to criticize, focusing upon those arguing for insider trading using correct data to make their cases seems preferable.

“The main motivation for considering increments in open interests is the following. Large volumes do not necessarily imply that large buy orders are executed because the same put option could be traded several times during the day. In contrast large increments in open interest are originated by large buy orders. These increments also imply that other long investors are unwilling to close their positions forcing the market maker to issue new put options.” (Chesney, et al., pp. 8-9)

In order to abstract from intraday speculation, they compare daily changes in open interest to the reported volumes of transactions (the difference between the two should be small). In other words, purchases are to dominant, with sales or exercises of options small.

This calculation could seem to suggest 103 times in eight and one-quarter years beginning in January 1998. But a stock like AMR stock price fell considerably from April 2002 to a low of $1.25 within one year thereafter implying much higher volumes then required for similar dollar option positions.

Actually, AMR closed at $17.90 on both September 21 and 27 before the October 20 option expiration; the $18.00 on September 17 was not quite the lowest. However, presumably the option price was the highest on September 17.

Let Gt be the cumulative gains achieved through the exercises of the selected option in the shortest time available from the day of the calculated maximum up to ten trading days thereafter. Chesney’s third criterion is then offered as a pair of conditions for the option trade in question, that is,

• rtmax ≥ q0.90(rtmax)


•Gt ≥ q0.98(Gt).

The quantiles at day t for the rtmax and Gt distributions – q0.90(rtmax ) and q0.98(Gt) – are computed using the preceding two years of data. These criteria are the quantiles for the top 10% of initial profiting and top 2% of total gains.


+++++++++++++++++++++++ ** PART TWO **


PART TWO -----------


E-mail hthompson@bus.wisc.edu






-------------- + 72 Scholar articles here for Howard E. Thompson



Black 9/11: A Walk on the Dark Side

Second in a series

by Mark H. Gaffney

March 2, 2011


[27] Wing-Keung Wong, et al, “Was there Abnormal Trading in the S&P 500 Index Options Prior to the September 11 Attacks?,” Social Sciences Research Network, April 2010, http://papers.ssrn.com/sol3/papers.cfm?


Was There Abnormal Trading in the S&P 500 Index Options Prior to the September 11 Attacks?

Wing-Keung Wong

Hong Kong Baptist University (HKBU)

Howard E. Thompson

University of Wisconsin - Madison - School of Business

Kweehong Teh

National University of Singapore (NUS)

April 13, 2010



Edited by Steven Gaal
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COLBY CAN NOW CONTACT PROFESSOR Zarembka whose CV Colby denigrates. (Fulbright Scholar)

Colby can talk about his scholar articles with the professor. OOPPS,Colby has no scholar articles. COLBY FAIL COLBY FAIL



Paul Zarembka

Professor of Economics

Office: 443 Fronczak Hall

Phone: (716) xxx - xxxx

E-mail: zarembka@buffalo.edu

Website: Professor Zarembka's Website

Spring 2012 classes: ECO 207

Spring 2012 office hours: Tue & Thu: 3:30 - 5:00 PM

ECO 207 Spring 12 Syllabus


•Ph.D. (1967) University of Wisconsin

•M.S. (1967) University of Wisconsin

•B.S. (1964) Purdue University

Research Interests

•Marxist Theory

•U.S. Labor History

•Economic Development

Selected Publications

"On the Empirical Relevance of the CES Production Function," Review of Economics and Statistics (1970)

Toward A Theory Of Economic Development, Holden-Day (1972)

(editor) Frontiers in Econometrics, Academic Press (1974)

"Capital Heterogeneity, Aggregation, and the Two-Sector Model",Quarterly Journal of Economics (1975)

"Transformation of Variables in Econometrics", The New Palgrave: A Dictionary of Economics (1987)

"The Development of State Capitalism in the Soviet Union", Research in Political Economy (1992)

"Accumulation of Capital, its Definition: A Century after Lenin and Luxemburg", Value, Capitalist Dynamics and Money, Research in Political Economy (2000)

"Rosa Luxemburg's Accumulation of Capital: Critics try to bury the Message", Bringing Capitalism Back for Critique by Social Theory, Current Perspectives in Social Theory (2002)

"The Declining Importance of Hegel for Marx: J.D. White's Provocative Work", Historical Materialism, No. 8 (2002)

"Lenin as Economist of Production: A Ricardian Step Backwards", Science & Society (2003)

(editor) The Hidden History of 9-11-2001, JAI/Elsevier Science (2006); paperback 2nd. edition, Seven Stories Press (2008)

Other Contributions and Distinctions

•Co-Editor (with M. Brown and K. Sato), Essays in Modern Capital Theory, North-Holland (1976)

•Series Editor, Research in Political Economy, JAI/Elsevier Press (1977-present)

•Fulbright-Hayes Scholar, Academy of Economics, Poznan, Poland (1979)

•Who's Who is America, various editions

•Who's Who in Economics, various editions

•Who's Who in Finance & Business, various editions

•Who's Who in American Education, various editions

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COLBY// That should be obvious to anyone with more brain power than a cherry tomato, not sure if you qualify. But as stated above even IF true it would not refute any claims I’ve made here.


GAAL RESPONDS// Colby started a thread about a 911 Truther's drug arrest. Gee how would that affect any claims he made ?? NOPE, COLBY FAIL. == COLBY vs COLBY again.

Again? You’ve yet to show an actual conflict in my views. I initially posted the news without comment, but his denials called his credibility into question. He apologized but indicated he’d done nothing wrong. He was in a car with a heroin dealer he’d made a 2 hour plus drive with from NYC. Based on the amount of heroin and cash the dealer had on him, there probably were earlier sales and would have later ones if they hadn’t been arrested. The dealer was from the South Bronx, they were in Rowe’s hometown upstate.

COLBY// Get back to us with links to the supposed studies that supposedly support his views.





It is a lot easier to cut and paste articles than to read, understand, verify, analyze and reply to them. As previously noted Zarembka is a Marxist economist, there is no evidence of any expertise regarding financial markets. Many of the sources he cites are NOT economist. Some are but only apply statistical analysis without considering why some stocks may have been shorted before 9/11. If get back on this when I have more time.

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  • 7 months later...

Sorry this very informative post by Mr. Scott devolved into this kind of rant.

The false flag argument has made sense to me from the beginning. And the footprints of intelligence are all over this thing, whether its Saudis being monitored secretly in the US but not stopped from the deadly 9/11 strikes, or the connections to Omar Saeed Sheikh and his ISI superiors like Lt. general Mahmoud Ahmed. One thing that fits into this theory is the incredible control over information gathered from the captured and tortured Al Qaida soldiers. Funny that Alec Station operatives Blee and Cambone were involved with early interrogations in Afghanistan. Khalid Sheikh Muhammed sits in his Guantanamo cell having confessed to nearly every terrorist act of the last 15 years as a result of waterboarding. The Pakistan government turned him over rather easily, as well as some 300 other Al Qaida and Taliban fighters, but refused to give us or Britain even access, much less deportation, of Omar Saeed Sheikh, who awaits his appeal on the Daniel Pearl case. I know there are other good reasons for keeping interrogation results secret. But not making any diplomatic noise when Pakistan refuses to extradite Omar Saeed Sheikh?

I would really like to know what the readers here think about this case. If this post turns out to be inconveniently placed I'll try to start a new thread.

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Sorry this very informative post by Mr. Scott devolved into this kind of rant.

The false flag argument has made sense to me from the beginning. And the footprints of intelligence are all over this thing, whether its Saudis being monitored secretly in the US but not stopped from the deadly 9/11 strikes, or the connections to Omar Saeed Sheikh and his ISI superiors like Lt. general Mahmoud Ahmed.

It is really far from clear that Saeed was working directly for the ISI at the time or if Ahmed was involved in the money transfer.


One thing that fits into this theory is the incredible control over information gathered from the captured and tortured Al Qaida soldiers. Funny that Alec Station operatives Blee and Cambone were involved with early interrogations in Afghanistan. Khalid Sheikh Muhammed sits in his Guantanamo cell having confessed to nearly every terrorist act of the last 15 years as a result of waterboarding.

Makes sense to me they, supposedly at least, were the CIA to anti-terrorism experts. As for KSM he seems to have been to terrorism what Henry Lee Lucas was to serial killing except that the former unlike the latter never recanted.

The Pakistan government turned him over rather easily, as well as some 300 other Al Qaida and Taliban fighters, but refused to give us or Britain even access, much less deportation, of Omar Saeed Sheikh, who awaits his appeal on the Daniel Pearl case. I know there are other good reasons for keeping interrogation results secret. But not making any diplomatic noise when Pakistan refuses to extradite Omar Saeed Sheikh?

Saeed was convicted of a murder committed in Pakistan the 9/11 attack were of course on US soil. Are you sure "the Pakistan government turned...over ...some 300 other Al Qaida and Taliban fighters"? And that they have "refused to give us or Britain even access..." to Saeed? He did seem to have been involved with the ISI's opperations in Kashmir, I can see how that would be a sensitive topic.

I would really like to know what the readers here think about this case. If this post turns out to be inconveniently placed I'll try to start a new thread.

IMO here's as good a place as any

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Thanks for the link to the 9/11 myths article. I have seen it before, and have the same reaction this time as I had before. Its of course true that none of the allegations against Sheikh Omar and Mahmoud Ahmed are proven. However it is true that Pakistan has refused both Britain and US requests, multiple, for extradition. If one looks deeper into Sheikh Omar one finds that Pakistan, presumably elements of the ISI or military, hijacked an Air India jet in 1999 ( I think) in order to get Sheikh and two other prisoners held by India for terrorist acts in Kashmir released by India. It is also true to the best of my knowledge that Sheikh travelled twice to England between that release and 9/11 with no passport troubles, even though he had kidnapped a British citizen in Kashmir and was wanted by England on those charges. After 9/11 and before the Pearl kidnapping Britain asked for his extradition but was refused. Musharraf as you know calls Sheikh a double agent, or possibly a British agent, in his recent book. I don't put much faith in this assessment, but mention it because I find it interesting that Musharraf should mention him. Sure, Mahmoud's being relieved of his post may indicate Musharraf was trying to be cooperative with the US, but considering that it was Mahmoud who arrested Musharraf's predecessor in the coup makes me wonder if this wasn't simply a mutually agreeable decision to remove him for purely political purposes. It is interesting that Mahmoud was meeting with Porter Goss and Bob Graham, I believe respective heads of intelligence committees in Congress, when 9/11 occurred. It was only on this forum that I found out that Goss was part of the CIA's operation 40. I also wondered about Graham, who . has asked in 2011 for a new inquiry into 9/11 he says as a result of recent discoveries in Florida. He published a book after his experience on the first inquiry which was heavily redacted, and then more recently published a fictionalized account of a Florida Senator who was killed when he got too close to a Saudi conspiracy on 9/11. I may have a little of this incorrect but it is pretty close. I am almost amused to find out that Bob Graham is the brother of Philip Graham, ex-Washington Post editor who committed suicide? Months before JFK was killed.

When you ask questions like 'am I sure' of this or that about Mahmoud or Sheikh, the answer is of course not. But my alarm bells are ringing. What is the latest info on Musharraf? Still in 'exile' in Britain for his cover-up of the ISI-enabled assassination of Bhutto? When he held his famous post 9/11 press conference to the world's media in front of the world's cameras I thought it was kind of like hiding in plain sight. He certainly knows more than he has said about all this, and he is a most clever fellow for sure, for years the friendly face of Pakistani cooperation with the US but perhaps also the friendly front for the terrorists in ISI and the Taliban. I for one don't trust anything he says.

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  • 1 month later...

Thanks for the link to the 9/11 myths article. I have seen it before, and have the same reaction this time as I had before. Its of course true that none of the allegations against Sheikh Omar and Mahmoud Ahmed are proven. However it is true that Pakistan has refused both Britain and US requests, multiple, for extradition. If one looks deeper into Sheikh Omar one finds that Pakistan, presumably elements of the ISI or military, hijacked an Air India jet in 1999 ( I think) in order to get Sheikh and two other prisoners held by India for terrorist acts in Kashmir released by India. It is also true to the best of my knowledge that Sheikh travelled twice to England between that release and 9/11 with no passport troubles, even though he had kidnapped a British citizen in Kashmir and was wanted by England on those charges. After 9/11 and before the Pearl kidnapping Britain asked for his extradition but was refused.

I'm not very familiar with this scenario can you post some citations? No, rush.

Musharraf as you know calls Sheikh a double agent, or possibly a British agent, in his recent book. I don't put much faith in this assessment, but mention it because I find it interesting that Musharraf should mention him. Sure, Mahmoud's being relieved of his post may indicate Musharraf was trying to be cooperative with the US, but considering that it was Mahmoud who arrested Musharraf's predecessor in the coup makes me wonder if this wasn't simply a mutually agreeable decision to remove him for purely political purposes.

My impression of Musharraf his primary if not unique motivating factor was doing what was in his best interest, I wouldn't put much faith in anything he said.

It is interesting that Mahmoud was meeting with Porter Goss and Bob Graham, I believe respective heads of intelligence committees in Congress, when 9/11 occurred. It was only on this forum that I found out that Goss was part of the CIA's operation 40. I also wondered about Graham, who . has asked in 2011 for a new inquiry into 9/11 he says as a result of recent discoveries in Florida. He published a book after his experience on the first inquiry which was heavily redacted, and then more recently published a fictionalized account of a Florida Senator who was killed when he got too close to a Saudi conspiracy on 9/11. I may have a little of this incorrect but it is pretty close. I am almost amused to find out that Bob Graham is the brother of Philip Graham, ex-Washington Post editor who committed suicide? Months before JFK was killed.

I can't imagine the meeting as anything more than coincidence. Even 9/11 was an “inside job” how would that have furthered the plot? That was rhetorical (for you) but truthers have not been able to answer when asked in earnest. As for Graham see my reply here:


When you ask questions like 'am I sure' of this or that about Mahmoud or Sheikh, the answer is of course not. But my alarm bells are ringing.

OK I'll rephrase can you post any evidence in support of those claims?

What is the latest info on Musharraf? Still in 'exile' in Britain for his cover-up of the ISI-enabled assassination of Bhutto? When he held his famous post 9/11 press conference to the world's media in front of the world's cameras I thought it was kind of like hiding in plain sight. He certainly knows more than he has said about all this, and he is a most clever fellow for sure, for years the friendly face of Pakistani cooperation with the US but perhaps also the friendly front for the terrorists in ISI and the Taliban. I for one don't trust anything he says.

Agreed he seems like a snake, Bhutto's widower seems like another; in that corner of the world the scum tends to rise to the top.

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