Cringely Looks at the WikiLeaks Debacle

dtwood writes "Infoworld's Cringely has an interesting take on the Julius Baer bank trying to silence WikiLeaks.org — and how stunningly stupid they've been. 'But the bank's solution is so mind-bogglingly stupid, you have to wonder if these guys need help getting their pants on each morning. First, this is exactly the kind of story bloggers and Net-centric journos crave. Big nasty corporation stomps all over plucky public-serving underdog. Who can resist that plot line? Second, the equation Bank Julius Baer = Money Laundering is now firmly cemented in the minds of everyone who has encountered this story, regardless of whether it's true. Trois: The documents in question, which might have been quickly forgotten alongside the 1.2 million others on the site, are now hotter than the Paris Hilton sex video. Dozens of mirror sites have sprung up, and Cryptome.org and PirateBay have squirreled away copies of the docs for any interested parties. "

Comments

Streisand

[Hordeking]

I think this is called the Streisand Effect.

Re:Streisand

[Anonymous Coward]

Streisand Effect

Re:Streisand

[milsoRgen]

Let's keep this rolling, the document in question can be found here.

Copy/pasted from the NYTimes

[wile_e_wonka]

The site itself could still be accessed at its Internet Protocol address (http://88.80.13.160/) the unique number that specifies a Web sites location on the Internet. Wikileaks also maintained mirror sites, or copies usually produced to ensure against failures and this kind of legal action. Some sites were registered in Belgium (http://wikileaks.be/), Germany (http://wikileaks.de) and the Christmas Islands (http://wikileaks.cx) through domain registrars other than Dynadot, and so were not affected by the injunction.

Re:Copy/pasted from the NYTimes

[OldakQuill]

Wikileaks also has a Tor hidden service, which potentially makes them unlitigatable (should the existing publicly-known host countries turn against them). At the moment, I think the HiddenService just provides a secure connection to one of those known servers, but the server could be located anywhere in the world and it would be close-to-impossible to locate it.

Re:Mod Up Informative.

[Anonymous Coward]

Hi. At the risk of going off-topic, I'd like to thank you and the parent poster for not spelling "privileged" as "privledged". Cheers.

Dumb question: who is actually incriminated?

[seanadams.com]

Everyone knows Cayman banks launder money, but my understanding is that at least in the case of US clients, only the client himself is actually breaking the law in his own country by not reporting those offshore assets. Did the leaked info actually incriminate a _client_ of the bank? Because the bank may in fact be confident enough that they themselves are operating legally within Swiss and or Cayman law that they don't care, or are even happy to have the exposure.

Re:Dumb question: who is actually incriminated?

[pcgc1xn]

You are mistaking money laundering with tax evasion.

If a US resident has money in a Cayman bank, then there is nothing illegal about this. The resident must declare this money, and the income it earns, to the IRS and they will tax it. If they do not declare the money, then this is tax evasion, and is bad and illegal in the same way if you don't declare the income from your side job where you get paid in cash. But this is the clients problem, not the banks.

Banks in the Caymans (and other countries) are useful because if you are a resident of somewhere that doesn't have income tax on offshore investments, then you will have a nice, legal, tax free income. Remember YMWV, depending on the tax laws of your country.

Money laundering is a different kettle of fish. Basically it is an attempt to solve the problem of how to make illegal income look like it is legitimate. Say you have a prosperous drugs business, then you need a way to legitimise the source of the money, or you will have a large number of agencies knocking on your door, including the IRS.

The other thing that makes countries like the Caymans popular is they have very strict privacy laws, so other authorities cannot find out who actually owns company x. So if you have a big pot of money you made from generic nefarious deals that you want to spend. All you do is borrow a few mil from "pcgc1xn Cayman Lending Inc". If anyone comes knocking and asks how you paid for the Bentley, you can show them the loan documents, and there is a dead end, with no way to prove you have any relation to "pcgc1xn Cayman Lending Inc" other than as a customer.

Money laundering is generally made illegal by requiring banks etc to know who their clients are, where their income actually comes from, and by requiring them to report suspicious activities to various authorities. If the documents showed that the bank did not report suspicious activities to the Swiss authorities, or worse, had a policy of not doing so, then the bank was likely to be breaking Swiss law.

This is a general overview, with some pretty simplistic examples, so don't take it as gospel.

Bank Julius Baer had an IPO pending

[Animats]

"Cringley" missed a key element of the story. Bank Julius Baer was preparing to take their US operation public via an IPO for about a billion dollars. They filed the prospectus with the SEC a few weeks ago. "We are an asset management company that provides investment management services to institutional and mutual fund clients. We are best known for our International Equity strategies, which represented 92% of our assets under management as of September 30, 2007." They were going to call the business "Artio" (ticker symbol ART, to be listed on the NYSE). Goldman Sachs and Merrill Lynch were to underwrite the IPO.

So the last thing they needed was to be the subject of a New York Times story and all over the world press, associated with money laundering. Now the deal goes under a microscope. Their underwriters have to take a second look and the SEC may have questions. Julius Baer will probably have to file a "material event" 8-K report with the SEC. Newspaper and magazine reporters will be looking at Baer. The question will be raised that the rather high returns Baer reports may be achieved via money laundering.

All this is happening in a down market, in which it's hard to do an IPO and in which investors are very sensitive to unexpected risk. The whole deal may evaporate, or be repriced downward.

This was a very, very expensive mistake for Baer.

Re:Who is stupid?

[darkmeridian]

From wikileaks, the attorney for the Bank is EVAN N. SPIEGEL, ESQ., of LAVELY & SINGER. Their address is 2049 CENTURY PARK EAST, SUITE 2400, LOS ANGELES, CALIFORNIA 90067-2906, TELEPHONE: (310) 556-3501, FACSIMILE: (310) 556-3615, www.LavelySinger.com, E-MAIL: espiegel@lavelysinger.com.

http://88.80.13.160/wiki/Full_correspondence_between_Wikileaks_and_Bank_Julius_Baer

Mr. Spiegel is a pretty senior attorney, so I'm surprised by how inept his actions were. There is no need to write so pointedly. There are times when you need to fight, but they are few and far between. Evan's first message did not mention the DMCA at all; it just asked for contact information. His later e-mails began discussing the DMCA, and then threatened legal actions in the U.S., U.K., and Switzerland. Why didn't he just answer politely in the first place?

It's just bad lawyering, in my opinion. Proof is the fact you can still access wikileaks, and you're reading this post because of all the publicity. Backfire!

Servers on Fire

[j_m_downing]

According to the Wired article, their servers may have actually lit on fire.

...the organization's hosting center in Sweden was also struck by a denial-of-service attack, after which a fire erupted in the center as well.

D-O-S, or slashdotted? And is there a difference, from the perspective of someone whoose servers have flames shooting out of them?

Infoworld's Cringely is NOT the 'famous' Cringely.

[Anonymous Freak]

Just to be clear, this is *NOT* the same as the more famous PBS Cringely.

Short story: The guy commonly thought of as "Robert X. Cringely" (in reality Mark Stephens,) was actually Infoworld's third writer in the Robert X. Cringely column (and therefore, the third to use the name.) He wrote it for so long, that when he left Infoworld, he got to keep the name, as long as he doesn't use it in another computer-industry magazine. Infoworld has been through a number of people writing as "Robert X. Cringely" since Mark Stephens' departure.

The Infoworld column is pretty standard back-page tech-mag column material, Stephens is the one you think "has been slipping".

Re:Who is stupid?

[reebmmm]

The lawyers think- "Having these documents out is bad. But we could bring a legal challenge to their availability. If having them out is bad, it stands to reason that having a chance to try to get them back in is good."

First, your analysis isn't how most lawyers think; it's how their clients think. And, let me be the first lawyer to say that many lawyers are considerably more cautious than their clients. Most lawyers don't rush to take action unless there's a really good reason.*

Also, many lawyers are familiar with the "Striesand effect" (if not by that name).

And, even if they're not cautious, lawyers aren't usually the ones steering the boat. At best, they're the guy on top of the ship screaming "iceberg!" And, then they're given unenviable task of being the person to also execute the very public actions.

"hey, we could sue this small public-interest nonprofit into oblivion, which would undoubtedly accomplish halting the spread of this information on the internet,"

I doubt, very highly, that suing wikileaks into oblivion was the advice given. Rather, the question was how to address espionage and trade secret issues. In most cases, enforcing your rights is the right choice since it'll never be heard (court enforced gag order) and the documents are returned or destroy. The riskier choice is leaving them out there for public consumption.

The problem in this case (as became obvious from the e-mail correspondence between the lawyer and K. Kim) was that 1) the documents here show illegal activity and have public interest; 2) the locations of the documents make enforcing a court order incredibly unlikely; and 3) the documents are housed at a sympathetic organization.

* A special note that trade secret and industrial espionage are usually good reasons to act quickly. As I note later, most of the time, getting a court to impose an order requiring the return or destruction of documents and a gag on further disclosure isn't difficult. Wikileaks, however, is organized in such a way that the typical response was ill-suited.

Re:They have a point, sort of

[Rizzen]

But if you look at the email transactions it would appear that the Wikileaks representative did in fact ask them to identify the infringing documents so they could be removed, or updated to reflect correct information. They also pointed out that they were not stopping the banking firm from posting its own information to clarify the documents.

Instead, they were meet with more hostility and the same ambiguous demands from the lawyer.

No, this is not a "Wikileaks press release"

[Animats]

In a weird development, someone copied my Slashdot posting above, changed the intro so it looks like a "Wikileaks press release", and sent it to some news outlets via e-mail. It was published by Global Integrity Commons and ZDnet as if from Wikileaks. Someone took out the first sentence about Cringely and put in "Wikileaks has discovered". After the second line, the supposed "Wikileaks press release" matches my text word for word.

I have no connection with Wikileaks, and have no idea who's behind this hoax.

Then again, maybe it is real.

[Animats]

I've just received an e-mail from "press@wikileaks.be" saying that they copied their press release from my Slashdot posting:

Dear X

We'd like to thank you for your post to slashdot which we have used after fact checking and a little rewriting in one of our press releases. We would have liked to credit you directly, but the post was pseudononymous.

WL

The source is a DSL line in Sweden, so I can't confirm this is valid. I've tried calling Wikileaks, but their phone line is returning a fast busy.

Straightening out the source issue.

[Animats]

I now have an admission from Wikileaks that they copied my posting above and put their name on it as if they wrote it. That was sloppy journalism on their part. ZDnet, which published the Wikileaks press release, has published a correction.

My concern is to make it clear that I'm neither behind Wikileaks nor copying material from them. I'm writing my own material under my own name, and I stand behind it. "Animats" isn't an anonymous handle; I own "animats.com", and "ANIMATS" is my US registered trademark.

John Nagle (nagle@animats.com)