One-Percent Jokes and Plutocrats in Drag

What I Saw When I Crashed a Wall Street Secret Society 

By Kevin Roose 
New York Magazine 
Feb 18, 2014 

Recently, our nation’s financial chieftains have been feeling a little unloved. Venture capitalists are comparing the persecution of the rich to the plight ofJews at Kristallnacht, Wall Street titans are saying that they’re sick of being beaten up, and this week, a billionaire investor, Wilbur Ross, proclaimed that “the 1 percent is being picked on for political reasons.”

Ross's statement seemed particularly odd, because two years ago, I met Ross at an event that might single-handedly explain why the rest of the country still hates financial tycoons – the annual black-tie induction ceremony of a secret Wall Street fraternity called Kappa Beta Phi.

“Good evening, Exalted High Council, former Grand Swipes, Grand Swipes-in-waiting, fellow Wall Street Kappas, Kappas from the Spring Street and Montgomery Street chapters, and worthless neophytes!”

It was January 2012, and Ross, wearing a tuxedo and purple velvet moccasins embroidered with the fraternity’s Greek letters, was standing at the dais of the St. Regis Hotel ballroom, welcoming a crowd of two hundred wealthy and famous Wall Street figures to the Kappa Beta Phi dinner. Ross, the leader (or “Grand Swipe”) of the fraternity, was preparing to invite 21 new members — “neophytes,” as the group called them — to join its exclusive ranks.

Looking up at him from an elegant dinner of rack of lamb and foie gras were many of the most famous investors in the world, including executives from nearly every too-big-to-fail bank, private equity megafirm, and major hedge fund. AIG CEO Bob Benmosche was there, as were Wall Street superlawyer Marty Lipton and Alan “Ace” Greenberg, the former chairman of Bear Stearns. And those were just the returning members. Among the neophytes were hedge fund billionaire and major Obama donor Marc Lasry and Joe Reece, a high-ranking dealmaker at Credit Suisse. [To see the full Kappa Beta Phi member list, click here.] All told, enough wealth and power was concentrated in the St. Regis that night that if you had dropped a bomb on the roof, global finance as we know it might have ceased to exist.

During his introductory remarks, Ross spoke for several minutes about the legend of Kappa Beta Phi – how it had been started in 1929 by “four C+ William and Mary students”; how its crest, depicting a “macho right hand in a proper Savile Row suit and a Turnbull and Asser shirtsleeve,” was superior to that of its namesake Phi Beta Kappa (Ross called Phi Beta Kappa’s ruffled-sleeve logo a “tacit confession of homosexuality”); and how the fraternity’s motto, “Dum vivamus edimus et biberimus,” was Latin for “While we live, we eat and drink.”

On cue, the financiers shouted out in a thundering bellow: “DUM VIVAMUS EDIMUS ET BIBERIMUS.”

The only person not saying the chant along with Ross was me — a journalist who had sneaked into the event, and who was hiding out at a table in the back corner in a rented tuxedo.

I’d heard whisperings about the existence of Kappa Beta Phi, whose members included both incredibly successful financiers (New York City's Mayor Michael Bloomberg, former Goldman Sachs chairman John Whitehead, hedge-fund billionaire Paul Tudor Jones) and incredibly unsuccessful ones (Lehman Brothers CEO Dick Fuld, Bear Stearns CEO Jimmy Cayne, former New Jersey governor and MF Global flameout Jon Corzine). It was a secret fraternity, founded at the beginning of the Great Depression, that functioned as a sort of one-percenter’s Friars Club. Each year, the group’s dinner features comedy skits, musical acts in drag, and off-color jokes, and its group’s privacy mantra is “What happens at the St. Regis stays at the St. Regis.” For eight decades, it worked. No outsider in living memory had witnessed the entire proceedings firsthand.

I wanted to break the streak for several reasons. As part of my research for my book,Young Money, I’d been investigating the lives of young Wall Street bankers – the 22-year-olds toiling at the bottom of the financial sector’s food chain. I knew what made those people tick. But in my career as a financial journalist, one question that proved stubbornly elusive was what happened to Wall Streeters as they climbed the ladder to adulthood. Whenever I’d interviewed CEOs and chairmen at big Wall Street firms, they were always too guarded, too on-message and wrapped in media-relations armor to reveal anything interesting about the psychology of the ultra-wealthy. But if I could somehow see these barons in their natural environment, with their defenses down, I might be able to understand the world my young subjects were stepping into.

So when I learned when and where Kappa Beta Phi’s annual dinner was being held, I knew I needed to try to go.

Getting in was shockingly easy — a brisk walk past the sign-in desk, and I was inside cocktail hour. Immediately, I saw faces I recognized from the papers. I picked up an event program and saw that there were other boldface names on the Kappa Beta Phi membership roll — among them, then-Citigroup CEO Vikram Pandit, BlackRock CEO Larry Fink, Home Depot billionaire Ken Langone, Morgan Stanley bigwig Greg Fleming, and JPMorgan Chase vice chairman Jimmy Lee. Any way you count, this was one of the most powerful groups of business executives in the world. (Since I was a good 20 years younger than any other attendee, I suspect that anyone taking note of my presence assumed I was a waiter.)

I hadn’t counted on getting in to the Kappa Beta Phi dinner, and now that I had gotten past security, I wasn’t sure quite what to do. I wanted to avoid rousing suspicion, and I knew that talking to people would get me outed in short order. So I did the next best thing — slouched against a far wall of the room, and pretended to tap out emails on my phone.

After cocktail hour, the new inductees – all of whom were required to dress in leotards and gold-sequined skirts, with costume wigs – began their variety-show acts. Among the night’s lowlights:

• Paul Queally, a private-equity executive with Welsh, Carson, Anderson, & Stowe, told off-color jokes to Ted Virtue, another private-equity bigwig with MidOcean Partners. The jokes ranged from unfunny and sexist (Q: “What’s the biggest difference between Hillary Clinton and a catfish?” A: “One has whiskers and stinks, and the other is a fish”) to unfunny and homophobic (Q: “What’s the biggest difference between Barney Frank and a Fenway Frank?” A: “Barney Frank comes in different-size buns”).

• Bill Mulrow, a top executive at the Blackstone Group (who was later appointed chairman of the New York State Housing Finance Agency), and Emil Henry, a hedge fund manager with Tiger Infrastructure Partners and formerassistant secretary of the Treasury, performed a bizarre two-man comedy skit. Mulrow was dressed in raggedy, tie-dye clothes to play the part of a liberal radical, and Henry was playing the part of a wealthy baron. They exchanged lines as if staging a debate between the 99 percent and the 1 percent. (“Bill, look at you! You’re pathetic, you liberal! You need a bath!” Henry shouted. “My God, you callow, insensitive Republican! Don’t you know what we need to do? We need to create jobs,” Mulrow shot back.)

• David Moore, Marc Lasry, and Keith Meister — respectively, a holding company CEO, a billionaire hedge-fund manager, and an activist investor — sang a few seconds of a finance-themed parody of “YMCA” before getting the hook.

• Warren Stephens, an investment banking CEO, took the stage in a Confederate flag hat and sang a song about the financial crisis, set to the tune of “Dixie.” (“In Wall Street land we’ll take our stand, said Morgan and Goldman. But first we better get some loans, so quick, get to the Fed, man.”)

A few more acts followed, during which the veteran Kappas continued to gorge themselves on racks of lamb, throw petits fours at the stage, and laugh uproariously. Michael Novogratz, a former Army helicopter pilot with a shaved head and a stocky build whose firm, Fortress Investment Group, had made him a billionaire, was sitting next to me, drinking liberally and annotating each performance with jokes and insults.

“Can you fuckin’ believe Lasry up there?” Novogratz asked me. I nodded. He added, “He just gave me a ride in his jet a month ago.”

The neophytes – who had changed from their drag outfits into Mormon missionary costumes — broke into their musical finale: a parody version of “I Believe,” the hit ballad from The Book of Mormon, with customized lyrics like “I believe that God has a plan for all of us. I believe my plan involves a seven-figure bonus.” Amused, I pulled out my phone, and began recording the proceedings on video. Wrong move.

“Who the hell are you?” Novogratz demanded.

I felt my pulse spike. I was tempted to make a run for it, but – due to the ethics code of the New York Times, my then-employer – I had no choice but to out myself.

“I’m a reporter,” I said.

Novogratz stood up from the table.

"You’re not allowed to be here," he said.

I, too, stood, and tried to excuse myself, but he grabbed my arm and wouldn’t let go.

“Give me that or I’ll fucking break it!” Novogratz yelled, grabbing for my phone, which was filled with damning evidence. His eyes were bloodshot, and his neck veins were bulging. The song onstage was now over, and a number of prominent Kappas had rushed over to our table. Before the situation could escalate dangerously, a bond investor and former Grand Swipe named Alexandra Lebenthal stepped in between us. Wilbur Ross quickly followed, and the two of them led me out into the lobby, past a throng of Wall Street tycoons, some of whom seemed to be hyperventilating.

Once we made it to the lobby, Ross and Lebenthal reassured me that what I’d just seen wasn’t really a group of wealthy and powerful financiers making homophobic jokes, making light of the financial crisis, and bragging about their business conquests at Main Street’s expense. No, it was just a group of friends who came together to roast each other in a benign and self-deprecating manner. Nothing to see here.

But the extent of their worry wasn’t made clear until Ross offered himself up as a source for future stories in exchange for my cooperation.

“I’ll pick up the phone anytime, get you any help you need,” he said.

“Yeah, the people in this group could be very helpful,” Lebenthal chimed in. “If you could just keep their privacy in mind.”

I wasn’t going to be bribed off my story, but I understood their panic.  Here, after all, was a group that included many of the executives whose firms had collectively wrecked the global economy in 2008 and 2009. And they were laughing off the entire disaster in private, as if it were a long-forgotten lark. (Or worse, sing about it — one of the last skits of the night was a self-congratulatory parody of ABBA’s “Dancing Queen,” called “Bailout King.”) These were activities that amounted to a gigantic middle finger to Main Street and that, if made public, could end careers and damage very public reputations.

After several more minutes spent trying to do damage control, Ross and Lebenthal escorted me out of the St. Regis.

As I walked through the streets of midtown in my ill-fitting tuxedo, I thought about the implications of what I’d just seen.

The first and most obvious conclusion was that the upper ranks of finance are composed of people who have completely divorced themselves from reality. No self-aware and socially conscious Wall Street executive would have agreed to be part of a group whose tacit mission is to make light of the financial sector’s foibles. Not when those foibles had resulted in real harm to millions of people in the form of foreclosures, wrecked 401(k)s, and a devastating unemployment crisis.

The second thing I realized was that Kappa Beta Phi was, in large part, a fear-based organization. Here were executives who had strong ideas about politics, society, and the work of their colleagues, but who would never have the courage to voice those opinions in a public setting. Their cowardice had reduced them to sniping at their perceived enemies in the form of satirical songs and sketches, among only those people who had been handpicked to share their view of the world. And the idea of a reporter making those views public had caused them to throw a mass temper tantrum.

The last thought I had, and the saddest, was that many of these self-righteous Kappa Beta Phi members had surely been first-year bankers once. And in the 20, 30, or 40 years since, something fundamental about them had changed. Their pursuit of money and power had removed them from the larger world to the sad extent that, now, in the primes of their careers, the only people with whom they could be truly themselves were a handful of other prominent financiers.

Perhaps, I realized, this social isolation is why despite extraordinary evidence to the contrary, one-percenters like Ross keep saying how badly persecuted they are. When you’re a member of the fraternity of money, it can be hard to see past the foie gras to the real world.

Copyright 2014 by Kevin Roose. Reprinted by permission of Grand Central Publishing. All rights reserved.

RELATED

Revealed: The Full Membership List of Wall Street’s Secret Society 

See source for sound clips and photos

Source:

http://nymag.com/daily/intelligencer/2014/02/i-crashed-a-wall-street-secret-society.html

_________________

 
FEBRUARY 11TH 2014 IS 

The Day We Fight Back 

AGAINST MASS SURVEILLANCE

Edward Snowden's journey from patriot to America's most wanted

How Edward Snowden went from loyal NSA contractor to whistleblower 

By Luke Harding 
The Guardian 
Jan 31, 2014 

In late December 2001, someone calling themselves TheTrueHOOHA had a question. He was an 18-year-old American male with impressive IT skills and a sharp intelligence. His real identity was unknown. Everyone who posted on Ars Technica, a popular technology website, did so anonymously.

TheTrueHOOHA wanted to set up his own web server. It was a Saturday morning, a little after 11am. He posted: "It's my first time. Be gentle. Here's my dilemma: I want to be my own host. What do I need?"



Soon, regular users were piling in with helpful suggestions. TheTrueHOOHA replied: "Ah, the vast treasury of geek knowledge that is Ars." He would become a prolific contributor; over the next eight years, he authored nearly 800 comments. He described himself variously as "unemployed", a failed soldier, a "systems editor", and someone who had US State Department security clearance.

His home was on the east coast of America in the state of Maryland, near Washington DC. But by his mid-20s he was already an international man of mystery. He popped up in Europe – in Geneva, London, Ireland, Italy and Bosnia. He travelled to India. Despite having no degree, he knew an astonishing amount about computers. His politics appeared staunchly Republican. He believed strongly in personal liberty, defending, for example, Australians who farmed cannabis plants.

At times he could be rather obnoxious. He called one fellow-Arsian, for example, a "cock"; others who disagreed with his sink-or-swim views on social security were "fucking retards".

His chat logs cover a colourful array of themes: gaming, girls, sex, Japan, the stock market, his disastrous stint in the US army, his negative impressions of multiracial Britain (he was shocked by the number of "Muslims" in east London and wrote, "I thought I had gotten off of the plane in the wrong country… it was terrifying"), the joys of gun ownership ("I have a Walther P22. It's my only gun but I love it to death," he wrote in 2006). In their own way, the logs form a Bildungsroman.

Then, in 2009, the entries fizzle away. In February 2010, TheTrueHOOHA mentions a thing that troubles him: pervasive government surveillance. "Society really seems to have developed an unquestioning obedience towards spooky types… Did we get to where we are today via a slippery slope that was entirely within our control to stop? Or was it a relatively instantaneous sea change that sneaked in undetected because of pervasive government secrecy?"

TheTrueHOOHA's last post is on 21 May 2012. After that, he disappears, a lost electronic signature amid the vastness of cyberspace. He was, we now know, Edward Snowden.

Edward Joseph Snowden was born on 21 June 1983. His father Lonnie and mother Elizabeth – known as Wendy – were high-school sweethearts who married at 18. Lon was an officer in the US coastguard; Snowden spent his early years in Elizabeth City, on North Carolina's coast. He has an older sister, Jessica. When Snowden was small – a boy with thick blond hair and a toothy smile – he and his family moved to Maryland, within DC's commuter belt.

As his father recalls, Snowden's education went wrong when he got ill, probably with glandular fever. He missed "four or five months" of class in his mid-teens. Another factor hurt his studies: his parents were drifting apart. He failed to finish high school. In 1999, aged 16, Snowden enrolled at Anne Arundel community college, where he took computer courses.

In the aftermath of his parents' divorce, Snowden lived with a roommate, and then with his mother, in Ellicott City, just west of Baltimore. He grew up under the giant shadow of one government agency in particular. From his mother's front door, it takes 15 minutes to drive there. Half-hidden by trees is a big, green, cube-shaped building. An entrance sign off the Baltimore-Washington Parkway reads: "NSA next right. Employees only." The Puzzle Palace employs 40,000 people. It is the largest hirer of mathematicians in the US.

For Snowden, the likelihood of joining was slim. In his early 20s, his focus was on computers. To him, the internet was "the most important invention in all human history". He chatted online to people "with all sorts of views I would never have encountered on my own". He wasn't only a nerd: he kept fit, practised kung fu and, according to one entry on Ars, "dated Asian girls".

The 2003 US-led invasion of Iraq prompted Snowden to think seriously about a career in the military. "I wanted to fight in the Iraq war because I felt like I had an obligation as a human being to help free people from oppression," he has said.


The military offered what seemed, on the face of it, an attractive scheme, whereby recruits with no prior experience could try out to become elite soldiers. In May 2004, Snowden took the plunge and enlisted, reporting to Fort Benning in Georgia. It was a disaster. He was in good physical shape but an improbable soldier, shortsighted and with unusually narrow feet. During infantry training, he broke both his legs. After more than a month's uncertainty, the army finally discharged him.

Back in Maryland, he got a job as a "security specialist" at the University for Maryland's Centre for Advanced Study of Language. It was 2005. (He appears to have begun as a security guard, but then moved back into IT.) Snowden was working at a covert NSA facility on the university's campus. 

Thanks perhaps to his brief military history, he had broken into the world of US intelligence, albeit on a low rung. The centre worked closely with the US intelligence community, providing advanced language training.

In mid-2006, Snowden landed a job in IT at the CIA. He was rapidly learning that his exceptional IT skills opened all kinds of interesting government doors. "First off, the degree thing is crap, at least domestically. If you 'really' have 10 years of solid, provable IT experience… you CAN get a very well-paying IT job," he wrote online in July 2006.

In 2007, the CIA sent Snowden to Geneva on his first foreign tour. Switzerland was an awakening and an adventure. He was 24. His job was to maintain security for the CIA's computer network and look after computer security for US diplomats. He was a telecommunications information systems officer. He also had to maintain the heating and air-conditioning.

In Geneva, Snowden was exposed to an eclectic range of views. On one occasion, he gave an Estonian singer called Mel Kaldalu a lift to Munich. They had met at a Free Tibet event in Geneva; they didn't know each other brilliantly well, but well enough for Snowden to offer him a lift. They chatted for hours on the empty autobahn. Snowden argued that the US should act as a world policeman. Kaldalu disagreed. "Ed's an intelligent guy," he says. "Maybe even a little bit stubborn. He's outspoken. He likes to discuss things. Self-sustainable. He has his own opinions."

The Estonian singer and the CIA technician talked about the difficulty pro-Tibet activists had in getting Chinese visas. Snowden was sceptical about the Beijing Olympics. Kaldalu said the Israeli occupation of Palestine was morally questionable. Snowden said he understood this, but viewed US support for Israel as the "least worst" option. Kaldalu suggested a "deconstructive" approach. The pair also discussed how rapid digital changes might affect democracy and the way people governed themselves.

At the time, the figure who most closely embodied Snowden's rightwing views was Ron Paul, the most famous exponent of US libertarianism. Snowden supported Paul's 2008 bid for the US presidency. He was also impressed with the Republican candidate John McCain. He wasn't an Obama supporter as such, but he didn't object to him, either.

Once Obama became president, Snowden came to dislike him intensely. He criticised the White House's attempts to ban assault weapons. He was unimpressed by affirmative action. Another topic made him even angrier. The Snowden of 2009 inveighed against government officials who leaked classified information to newspapers – the worst crime conceivable, in Snowden's apoplectic view. In January of that year, the New York Times published a report on a secret Israeli plan to attack Iran. 

The Times said its story was based on 15 months' worth of interviews with current and former US officials, European and Israeli officials, other experts and international nuclear inspectors.

TheTrueHOOHA's response, published by Ars Technica, is revealing. In a long conversation with another user, he wrote the following messages:

"WTF NYTIMES. Are they TRYING to start a war?"

"They're reporting classified shit"

"moreover, who the fuck are the anonymous sources telling them this? those people should be shot in the balls"

"that shit is classified for a reason"

"it's not because 'oh we hope our citizens don't find out' its because 'this shit won't work if iran knows what we're doing'"

Snowden's anti-leaking invective seems stunningly at odds with his own later behaviour, but he would trace the beginning of his own disillusionment with government spying to this time. "Much of what I saw in Geneva really disillusioned me about how my government functions and what its impact is in the world. I realised that I was part of something that was doing far more harm than good," he later said.

In February 2009, Snowden resigned from the CIA. Now he was to work as a contractor at an NSA facility on a US military base in Japan. The opportunities for contractors had boomed as the burgeoning US security state outsourced intelligence tasks to private companies. Snowden was on the payroll of Dell, the computer firm. The early lacunae in his CV were by this stage pretty much irrelevant. He had top-secret clearance and outstanding computer skills. He had felt passionately about Japan from his early teens and had spent a year and a half studying Japanese. He sometimes used the Japanese pronunciation of his name – "E-do-waa-do" – and wrote in 2001: "I've always dreamed of being able to 'make it' in Japan. I'd love a cushy .gov job over there."

Japan marked a turning point, the period when Snowden became more than a disillusioned technician: "I watched as Obama advanced the very policies that I thought would be reined in." 

Between 2009 and 2012, he says he found out just how all-consuming the NSA's surveillance activities are: "They are intent on making every conversation and every form of behaviour in the world known to them." He also realised that the mechanisms built into the US system and designed to keep the NSA in check had failed. "You can't wait around for someone else to act. I had been looking for leaders, but I realised that leadership is about being the first to act." He left Japan for Hawaii in 2012, a whistleblower-in-waiting.

Snowden's new job was at the NSA's regional cryptological centre (the Central Security Service) on the main island of Oahu, near Honolulu. He was still a Dell contractor, working at one of the 13 NSA hubs devoted to spying on foreign interests, particularly the Chinese. He arrived with an audacious plan to make contact anonymously with journalists interested in civil liberties and to leak them stolen top-secret documents. His aim was not to spill state secrets wholesale. Rather, he wanted to turn over a selection of material to reporters and let them exercise their own editorial judgment.

According to an NSA staffer who worked with him in Hawaii and who later talked to Forbes magazine, Snowden was a principled and ultra-competent if somewhat eccentric colleague. He wore a hoodie featuring a parody NSA logo. Instead of a key in an eagle's claws, it had a pair of eavesdropping headphones, covering the bird's ears. He kept a copy of the constitution on his desk and wandered the halls carrying a Rubik's cube. He left small gifts on colleagues' desks. He almost lost his job sticking up for one co-worker who was being disciplined.

In Hawaii, by early 2013, Snowden's sense of outrage was still growing. But his plan to leak appeared to have stalled. He faced too many obstacles. He took a new job with the private contractor Booz Allen Hamilton, yielding him access to a fresh trove of information. According to the NSA staffer who spoke to Forbes, Snowden turned down an offer to join the agency's tailored access operations, a group of elite hackers.

On 30 March, in the evening, Snowden flew to the US mainland to attend training sessions at Booz Allen Hamilton's office near Fort Meade. His new salary was $122,000 (£74,000) a year, plus a housing allowance. On 4 April, he had dinner with his father. Lon Snowden says he found his son preoccupied and nursing a burden. "We hugged as we always do. He said: 'I love you, Dad.' I said: 'I love you, Ed.'"

"My position with Booz Allen Hamilton granted me access to lists of machines all over the world that the NSA hacked," Snowden told the South China Morning Post, adding that this was exactly why he'd accepted it. He was one of around 1,000 NSA "sysadmins" allowed to look at many parts of this system. (Other users with top-secret clearance weren't allowed to see all classified files.) He could open a file without leaving an electronic trace. He was, in the words of one intelligence source, a "ghost user", able to haunt the agency's hallowed places. He may also have used his administrator status to persuade others to entrust their login details to him.

Although we don't know exactly how he harvested the material, it appears Snowden downloaded NSA documents on to thumbnail drives. Thumb drives are forbidden to most staff, but a sysadmin could argue that he or she was repairing a corrupted user profile and needed a backup. Sitting back in Hawaii, Snowden could remotely reach into the NSA's servers. Most staff had already gone home for the night when he logged on, six time zones away. After four weeks in his new job, Snowden told his bosses at Booz that he was unwell. He wanted some time off and requested unpaid leave. When they checked back with him, he told them he had epilepsy (a condition that affects his mother).

And then, on 20 May, he vanished.

In December 2012, a reader pinged an email to Guardian columnist Glenn Greenwald, one of the more prominent US political commentators of his generation, based in Brazil. The email didn't stand out; he gets dozens of similar ones every day. The sender didn't identify himself. He (or it could have been a she) wrote: "I have some stuff you might be interested in."

"He was very vague," Greenwald recalls.

This mystery correspondent asked Greenwald to install PGP encryption software on his laptop. Once up and running, it guarantees privacy (the initials stand for Pretty Good Privacy) for an online chat. Greenwald had no objections. But there were two problems. "I'm basically technically illiterate," he admits. Greenwald also had a lingering sense that the kind of person who insisted on encryption might turn out to be slightly crazy.


A month after first trying Greenwald and failing to get a response, Snowden tried a different route. At the end of January 2013, he sent an email to Greenwald's friend and collaborator Laura Poitras, a documentary film-maker. She was another leading critic of the US security state – and one of its more prominent victims. For six years, between 2006 and 2012, agents from the Department of Homeland Security detained Poitras each time she entered the US. They would interrogate her, confiscate laptops and mobile phones, and demand to know whom she had met. They would seize her camera and notebooks. Nothing incriminating was ever discovered. Poitras became an expert in encryption. She decided to edit her next film, her third in a trilogy about US security, from outside America, and moved temporarily to Berlin.

Snowden's email to Poitras read: "I am a senior member of the intelligence community. This won't be a waste of your time." (The claim was something of an exaggeration: he was a relatively junior infrastructure analyst.) Snowden asked for her encryption key. She gave it. "I felt pretty intrigued pretty quickly," Poitras says. "At that point, my thought was either it's legit or it's entrapment."

The tone of the emails was serious, though there were moments of humour. At one point Snowden advised Poitras to put her mobile in the freezer. "He's an amazing writer. His emails were good. Everything I got read like a thriller," she recalls.

Then Snowden delivered a bombshell. He said he had got hold of Presidential Policy Directive 20, a top-secret 18-page document issued in October 2012. It said that the agency was tapping fibre optic cables, intercepting telephone landing points and bugging on a global scale. And he could prove all of it. "I almost fainted," Poitras says. The source made it clear he wanted Greenwald on board.

Poitras moved ultra-cautiously. It was a fair assumption that the US embassy in Berlin had her under some form of surveillance. It would have to be a personal meeting. In late March, she returned to the US and met Greenwald in the lobby of his hotel, the Marriott in Yonkers. They agreed that they needed to get hold of the national security documents: without them, it would be difficult to rattle the doors on these issues.

Poitras had assumed that Snowden would seek to remain anonymous, but he told her: "I hope you will paint a target on my back and tell the world I did this on my own."

By late spring 2013, the possibility of a meeting was in the air. Snowden intended to leak one actual document. The file would reveal collaboration between the NSA and giant internet corporations under a secret program called Prism.

Poitras flew again to New York for what she imagined would be her meeting with a senior intelligence bureaucrat. The source then sent her an encrypted file. In it was the Prism PowerPoint, and a second document that came as a total surprise: "Your destination is Hong Kong." The next day, he told her his name for the first time.

Poitras knew that if she searched Snowden's name on Google, this would immediately alert the NSA. Attached was a map, a set of protocols for how they would meet, and a message: "This is who I am. This is what they will say about me. This is the information I have."

In mid-April, Greenwald received a FedEx parcel containing two thumb drives with a security kit allowing him to install a basic encrypted chat program. Snowden now contacted Greenwald himself. "I have been working with a friend of yours… We need to talk, urgently." The whistleblower finally had a direct, secure connection to the elusive writer. Snowden wrote: "Can you come to Hong Kong?"

The demand struck Greenwald as bizarre. His instinct was to do nothing. He contacted Snowden via chat. "I would like some more substantial idea why I'm going and why this is worthwhile for me?"
Over the next two hours, Snowden explained to Greenwald how to boot up the Tails system, one of the securest forms of communication. Snowden then wrote, with what can only be called understatement, "I'm going to send you a few documents."

Snowden's welcome package was around 20 documents from the NSA's inner sanctuaries, most stamped Top Secret. At a glance, it suggested the NSA had misled Congress about the nature of its domestic spying activities, and quite possibly lied. "It was unbelievable," Greenwald says. "It was enough to make me hyperventilate."

Two days later, on 31 May, Greenwald sat in the office of Janine Gibson, the Guardian US's editor in New York. He said a trip to Hong Kong would enable the Guardian to find out about the mysterious source. Stuart Millar, the deputy editor of Guardian US, joined the discussion. Both executives agreed that the only way to establish the source's credentials was to meet him in person. Greenwald would take the 16-hour flight to Hong Kong the next day. Independently, Poitras was coming along, too. But Gibson ordered a third member on to the team, the Guardian's veteran Washington correspondent Ewen MacAskill. The 61-year-old Scot and political reporter was experienced and professional. He was calm. Everybody liked him.

Except Poitras. She was exceedingly upset. As she saw it, an extra person might freak out the source, who was already on edge. "She was insistent that this would not happen," Greenwald says. "She completely flipped out." He tried to mediate, without success.


However, at JFK airport, the ill-matched trio boarded a Cathay Pacific flight. Poitras sat at the back of the plane. She was funding her own trip. Greenwald and MacAskill, their bills picked up by the Guardian, were farther up in Premium Economy. As flight CX831 took off, there was a feeling of liberation. Up in the air, there is no internet – or at least there wasn't in June 2013. Once the seatbelt signs were off, Poitras brought a present they were both eager to open: a USB stick. Snowden had securely delivered her a second cache of secret NSA documents. This latest data set was far bigger than the initial "welcome pack". It contained 3,000-4,000 items.

For the rest of the journey, Greenwald read the latest cache, mesmerised. Sleep was impossible: "I didn't take my eyes off the screen for a second. The adrenaline was so extreme." From time to time Poitras would come up from her seat in the rear and grin at Greenwald. "We would just cackle and giggle like schoolchildren. We were screaming and hugging and dancing with each other up and down," he says. Their celebrations woke up some of their neighbours; they didn't care.

The first rendezvous was in Kowloon's Mira hotel, a chic, modern edifice in the heart of the tourist district. Poitras and Greenwald were to meet Snowden in a quiet part of the hotel, next to a large plastic alligator. They would swap pre-agreed phrases. Snowden would carry a Rubik's cube.

Everything Greenwald knew about Snowden pointed in one direction: that he was a grizzled veteran of the intelligence community. "I thought he must be a pretty senior bureaucrat," Greenwald says. 

Probably 60-odd, wearing a blue blazer with shiny gold buttons, receding grey hair, sensible black shoes, spectacles, a club tie. Perhaps he was the CIA's station chief in Hong Kong.

The pair reached the alligator ahead of schedule. They sat down. They waited. Nothing happened. The source didn't show. Strange.

If the initial meeting failed, the plan was to return later the same morning. Greenwald and Poitras came back. They waited for a second time.

And then they saw him – a pale, spindle-limbed, nervous, preposterously young man. He was dressed in a white T-shirt and jeans. In his right hand was a scrambled Rubik's cube. Had there been a mistake?

The young man – if indeed he were the source – had sent encrypted instructions as to how the initial verification would proceed:

Greenwald: What time does the restaurant open?

The source: At noon. But don't go there, the food sucks…

Greenwald – nervous – said his lines, struggling to keep a straight face. Snowden then said simply, "Follow me." The three walked silently to the elevator. They rode to the first floor and followed the cube-man to room 1014. Optimistically, Greenwald speculated that he was the son of the source, or his personal assistant. If not, then the encounter was a waste of time, a hoax.

Over the course of the day, however, Snowden told his story. He had access to tens of thousands of documents taken from NSA and GCHQ's internal servers. Most were stamped Top Secret. Some were marked Top Secret Strap 1 – the British higher tier of super-classification for intercept material – or even Strap 2, which was almost as secret as you could get. No one – apart from a restricted circle of security officials – had ever seen documents of this kind before. What he was carrying, Snowden indicated, was the biggest intelligence leak in history.

Greenwald bombarded him with questions. His credibility was on the line. So was that of his editors at the Guardian. Yet if Snowden were genuine, at any moment a CIA Swat team could burst into the room, confiscate his laptops and drag him away.

As he gave his answers, they began to feel certain Snowden was no fake. And his reasons for becoming a whistleblower were cogent, too. The NSA could bug "anyone", from the president downwards, he said. In theory, the spy agency was supposed to collect only "signals intelligence" on foreign targets. In practice this was a joke, Snowden told Greenwald: it was already hoovering up metadata from millions of Americans. Phone records, email headers, subject lines, seized without acknowledgment or consent. From this you could construct a complete electronic narrative of an individual's life: their friends, lovers, joys, sorrows.

The NSA had secretly attached intercepts to the undersea fibre optic cables that ringed the world. 

This allowed them to read much of the globe's communications. Secret courts were compelling telecoms providers to hand over data. What's more, pretty much all of Silicon Valley was involved with the NSA, Snowden said – Google, Microsoft, Facebook, even Steve Jobs's Apple. The NSA claimed it had "direct access" to the tech giants' servers. It had even put secret back doors into online encryption software – used to make secure bank payments – weakening the system for everybody. 

The spy agencies had hijacked the internet. Snowden told Greenwald he didn't want to live in a world "where everything that I say, everything that I do, everyone I talk to, every expression of love or friendship is recorded".

Snowden agreed to meet MacAskill the next morning. The encounter went smoothly until the reporter produced his iPhone. He asked Snowden if he minded if he taped their interview, and perhaps took some photos? Snowden flung up his arms in alarm, as if prodded by an electric stick. "I might as well have invited the NSA into his bedroom," MacAskill says. The young technician explained that the spy agency was capable of turning a mobile phone into a microphone and tracking device; bringing it into the room was an elementary mistake. MacAskill dumped the phone.

Snowden's own precautions were remarkable. He piled pillows up against the door to stop anyone eavesdropping from outside in the corridor. When putting passwords into computers, he placed a big red hood over his head and laptop, so the passwords couldn't be picked up by hidden cameras. On the three occasions he left his room, Snowden put a glass of water behind the door next to a bit of tissue paper. The paper had a soy sauce mark with a distinctive pattern. If anyone entered the room, the water would fall on the paper and it would change the pattern.

MacAskill asked Snowden, almost as an afterthought, whether there was a UK role in this mass data collection. It didn't seem likely to him. MacAskill knew that GCHQ had a longstanding intelligence-sharing relationship with the US, but he was taken aback by Snowden's vehement response. "GCHQ is worse than the NSA," Snowden said. "It's even more intrusive."

The following day, Wednesday 5 June, Snowden was still in place at the Mira hotel. That was the good news. The bad news was that the NSA and the police had been to see his girlfriend, Lindsay Mills, back at their home in Hawaii. Snowden's absence from work had been noted, an automatic procedure when NSA staff do not turn up. Snowden agonised: "My family does not know what is happening. My primary fear is that they will come after my family, my friends, my partner." He admitted, "That keeps me up at night."

But the CIA hadn't found him yet. This was one of the more baffling aspects of the Snowden affair: why did the US authorities not close in on him earlier? Once they had spotted his absence, they might have pulled flight records showing he had fled to Hong Kong. There he was comparatively easy to trace. He had checked into the $330-a-night Mira hotel under his own name. He was even paying the bill with his personal credit card.

That evening, Greenwald rapidly drafted a story about Verizon, revealing how the NSA was secretly collecting all the records from this major US telecoms company. Greenwald would work on his laptop, then pass it to MacAskill. MacAskill would type on his computer and hand Greenwald his articles on a memory stick; the sticks flowed back and forth. Nothing went on email.

In New York, Gibson drew up a careful plan for the first story. It had three basic components: seek legal advice; work out a strategy for approaching the White House; get draft copy from the reporters in Hong Kong. She wrote a tentative schedule on a whiteboard. (It was later titled The Legend Of The Phoenix, a line from 2013's big summer hit, Daft Punk's Get Lucky.)

Events were moving at speed. MacAskill had tapped out a four-word text from Hong Kong: "The Guinness is good." This code phrase meant he was now convinced Snowden was genuine. Gibson decided to give the NSA a four-hour window to comment, so the agency had an opportunity to disavow the story. By British standards, the deadline was fair: long enough to make a few calls, agree a line. But for Washington, where journalist-administration relations sometimes resemble a country club, this was nothing short of outrageous. In London, the Guardian's editor-in-chief, Alan Rusbridger, headed for the airport for the next available New York flight. 
 
The White House sent in its top guns for a conference call with the Guardian. The team included FBI deputy director Sean M Joyce, a Boston native with an action-man resumé – investigator against Colombian narcotics, counter-terrorism officer, legal attaché in Prague. Also patched in was Chris Inglis, the NSA's deputy director. He was a man who interacted with journalists so rarely, he was considered by many to be a mythical entity. Then there was Robert S Litt, the general counsel to the Office of the Director of National Intelligence. Litt was clever, likable, voluble, dramatic, lawyerly and prone to rhetorical flourishes. On the Guardian side were Gibson and Millar, sitting in Gibson's small office, with its cheap sofa and unimpressive view of Broadway.

By fielding heavyweights, the White House had perhaps reckoned it could flatter, and if necessary bully, the Guardian into delaying publication. Gibson explained that the editor-in-chief – in the air halfway across the Atlantic – was unavailable. She said: "I'm the final decision-maker." After 20 minutes, the White House was frustrated. The conversation was going in circles. Finally, one of the team could take no more. Losing his temper, he shouted, "You don't need to publish this! No serious news organisation would publish this!" Gibson replied, "With the greatest respect, we will take the decisions about what we publish."

Over in Hong Kong, Snowden and Greenwald were restless. Greenwald signalled that he was ready and willing to self-publish or take the scoop elsewhere if the Guardian hesitated. Time was running out. Snowden could be uncovered at any minute.

Just after 7pm, Guardian US went ahead and ran the story.

That evening, diggers arrived and tore up the sidewalk immediately in front of the Guardian's US office, a mysterious activity for a Wednesday night. With smooth efficiency, they replaced it. More diggers arrived outside Gibson's home in Brooklyn. Soon, every member of the Snowden team was able to recount similar unusual moments: "taxi drivers" who didn't know the way or the fare; "window cleaners" who lingered next to the editor's office. "Very quickly, we had to get better at spycraft," Gibson says.

Snowden now declared his intention to go public. Poitras recorded Greenwald interviewing him. She made a 12-minute film and got the video through to New York. In the Guardian US office, the record of Snowden actually speaking was cathartic. "We were completely blown away," Millar says. "We thought he was cool and plausible." When the moment arrived, with the video ready to go live, the atmosphere in the newsroom was deeply emotional.

Five people, including Rusbridger, were in the office. The video went up about 3pm local time on Sunday 9 June. "It was like a bomb going off," Rusbridger says. "There is a silent few seconds after a bomb explodes when nothing happens." The TV monitors were put on different channels; for almost an hour they carried prerecorded Sunday news. Then at 4pm the story erupted. Each network carried Snowden's image. It was 3am in Hong Kong when the video was posted online. It was the most-viewed story in the Guardian's history.

Snowden had just become the most hunted man on the planet. The chase was already on. Greenwald, in one of his many TV interviews, had been captioned by CNN as "Glenn Greenwald, Hong Kong" – a pretty big clue. The local Chinese media and international journalists now studied every frame of the video for clues. One enterprising hack used Twitter to identify the Mira from its lamps.

And then Snowden vanished.

This is an edited extract from The Snowden Files: The Inside Story Of The World's Most Wanted Man, by Luke Harding

Source:
http://www.theguardian.com/world/2014/feb/01/edward-snowden-intelligence-leak-nsa-contractor-extract/print
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