Who investigates the investigator?


Sightings from The Catbird Seat

~ o ~

September 1, 2006

The World’s Most Powerful Women

Angels and Demons

By Claire Miller, Forbes

Our annual listing of the World’s Most Powerful Women has seen a growing number of women with big career successes. A total of 48 women on the list now run businesses either as chief executives or chairmen, up from 35 last year.

And in a sign that women have arrived, they’re increasingly being called on to clean up corporate scandals. Women who’ve mopped up, and who remain high on our list, are Patricia Russo at Lucent Technologies and Anne Mulcahy at Xerox. Both pulled their companies back from the brink of bankruptcy.

But women can be troublemakers, too. They can collapse in scandal as disastrously as men. And because women are still a rarity at the top of the corporate ladder, they often get a lot more attention than their male counterparts on the way up–and on the way down.

The latest power woman to be kicked off our list in a high-profile scandal is Carla Cico, the former chief executive of Brasil Telecom, who was indicted last year on charges of criminal conspiracy after she allegedly hired a risk-consulting firm, a unit of Marsh & McLennan, to spy on competitor Telecom Italia


April 8, 2005

Brazil accuses U.S. firm of spying

By Martin Arostegui


RIO DE JANEIRO — A leading American consulting company is under investigation in Brazil on suspicion that it intercepted e-mails and used wiretaps and other illegal methods to monitor people who now hold Cabinet positions in the government of President Luiz Inacio Lula da Silva.

Kroll Associates Inc. also bribed government and police officials to obtain confidential information, according to authorities investigating an industrial espionage scandal, which also involves U.S. and Italian multinational companies.

Kroll’s offices in Sao Paulo and Rio de Janeiro were raided in October by Federal Police searching for evidence that the world’s biggest private intelligence firm had used illegal monitoring methods.

The purported victims include Cassio Casseb, a former president of Banco do Brasil, and Luiz Gushiken, who serves as minister of government communications.

Kroll, founded in New York in 1972, describes itself on its Web site as ‘the world’s leading risk consulting company,’ with offices in more than 60 cities in the United States and abroad.

It boasts that it can ‘scrutinize accounting practices and financial documents; gather and filter electronic evidence for attorneys; recover lost or damaged data from computers and servers; conduct in-depth investigations; screen domestic and foreign-born job candidates; protect individuals and enhance security systems and procedures.’

It is standard practice in some large corporations to have Kroll conduct background checks on candidates for top positions. The company also is reported to have been hired by governments to track down public funds stolen by the likes of Philippines President Ferdinand Marcos, Haitian dictator Jean-Claude ‘Baby Doc’ Duvalier and Iraqi dictator Saddam Hussein, all of whom have been ousted.

According to the Federal Police, confiscated Kroll documents contain records of payments to officers of state-run Brazilian savings and loan institutions and the Sao Paulo city police that are thought to represent bribes, usually $100 to $200.

Government prosecutors also cite witnesses who say they acted as intermediaries for Kroll’s undercover efforts to obtain account numbers, banking codes and other secret information.

Spokesmen for Kroll complain that the government is violating judicial procedure by disclosing evidence prior to a trial and that much of the information the company is accused of stealing is publicly available on the Internet.

Kroll was hired by owners of Brazil’s telecommunications firm, Brazil Telecom, to investigate suspected insider trading by business executives and government officials during a takeover bid by the Italian communications giant, Telecom Italia.

It was clearly a major operation involving top-level officers of Kroll’s London and New York headquarters. The head of Kroll’s Milan, Italy, office also came to Rio de Janeiro to supervise the investigation, according to journalists who say they met with him.


December 8, 2004

Kroll Telecom Espionage in Brazil

By Arik Johnson, Competitive Intelligence

In a statement, Kroll accused police of “installing a climate of panic and total intimidation” when they entered the office and arrested five people, seizing records, listening equipment and computers.

Kroll is owned by the U.S. insurance firm Marsh & McLennan, which is currently defending itself against Eliot Spitzer in a rate fixing scandal. Brazilian newspapers in July reported allegations Kroll was spying on members of the Brazilian government, including high-ranking ministers.

The company was originally reported to have been hired by the Brazilian investment firm Opportunity to investigate Telecom Italia. Opportunity has been battling with Telecom Italia to gain control of Brasil Telecom, one of the nation’s largest telephone companies.

Minister of Communications Luiz Gushiken – one of the subjects of Kroll’s investigation – called the alleged spying “flagrant disrespect for (Brazil’s) constitution.” Kroll reportedly obtained copies of emails written by Gushiken in connection with the Telecom Italia efforts to take over Brasil Telecom. Authorities also raided the Rio de Janeiro offices of Opportunity, which controls Brasil Telecom.

But back in late October, Kroll must’ve figured the best defense is a good offense, fighting back and supporting arrested employees in Brazil:

Marsh & McLennan Cos.’ Kroll Inc. took out ads in Brazil’s largest newspapers Thursday to defend five employees arrested amid allegations the international security consultant illegally spied in its probe of a bitter corporate dispute.

Kroll, whose offices were raided by police a day earlier, insisted it broke no Brazilian laws and expressed confidence the arrested employees, including two who head the company’s Brazil operations, would soon be cleared….

Five Brazilian Kroll workers were arrested on conspiracy charges. Kroll is owned by Marsh & McLennan, the largest U.S. insurance brokerage company, which is engulfed in a bid rigging and price fixing scandal. Earlier this week, Marsh & McLennan named former Kroll chief executive Michael Cherkasky as its new chief executive, replacing Jeffrey W. Greenberg, who was forced out by the company’s board….

In trading Thursday morning, Marsh & McLennan shares were up 28 cents, or 1 percent, at $28.97 on the New York Stock Exchange. The shares are off more than 35 percent since the scandal broke earlier this month…

Kroll was hired by Brasil Telecom to come up with proof that it forced by Telecom Italia to pay too much money for the purchase of Brazilian fixed line Companhia Riograndense de Telecomunicacoes, SA, or CRT, in 2000. Telecom Italia has been fighting for years for control of Brasil Telecom.

“The allegations and the police investigation stem from an acrimonious corporate dispute between our client and another corporation,” Kroll said.

So, what do you think – do corporate ethics standards run in the family? MMC’s new CEO better hope you don’t.



June 13, 2003

Federal Monitor:
Kroll is a global watchdog

by Tamara Audi, Detroit Free Press

It is called Kroll.

Sounds like a villain, acts like a superhero – swooping down on all manner of major and minor disasters around the world.

The government of Kuwait hired Kroll in 1990 to find Saddam Hussein’s hidden treasures. CNN hired it to examine accusations of false reporting. Kroll has built a security system for the Sears Tower in Chicago, proved that Italian banker Robert Calvi’s alleged suicide was a murder and now temporarily heads Enron.

It’s next assignment: Monitor the Detroit police for the federal government.

In more business-like terms, Kroll Inc. is a New York-based global risk-assessment company whose employees include former law enforcement officials, prosecutors, financial auditors and reporters.

The Detroit Police Department is the second department to come under Kroll’s watch as a federal monitor.

The Los Angeles Police Department was the first. Kroll began monitoring the LAPD in 2001, under a five-year, $11 million contract.

Detroit will pay the cost of having Kroll act as monitor. City officials said Thursday they are still working out terms with the company. The city has two contracts with Kroll. One is a two-year contract to monitor the police department’s detention practices. The other is a five-year contract to monitor arrest procedures.

Michael Cherkasky, president and chief executive of Kroll, said Thursday he did not think Detroit’s cost would be as high as Los Angeles’.

The face of Kroll in Detroit is a young and pleasant one. Her name is Sheryl Robinson, and she will head a team that will monitor Detroit’s progress in revamping practices that led to widespread civil-rights abuses of prisoners, suspects and witnesses.

Robinson, a 37-year-old lawyer, is armed with a resume that includes working fraud cases as an assistant district attorney in Manhattan, N.Y….

Robinson will remain based in Kroll’s Washington office, which she directs. But she will make frequent trips to Detroit and begin assembling a team of specialists to monitor everything from the department’s computer system to its arrests and detentions….


May 19, 2004

Marsh & McLennan to buy Kroll

By Eric Dash, The New York Times

Marsh & McLennan, the giant insurance and financial services company, has agreed to pay $1.9 billion in cash for Kroll, a leading corporate security business.

The transaction, announced Tuesday, will broaden Marsh’s reach into data recovery and corporate detective work at a time when the New York company’s three main businesses face separate regulatory investigations.

Jeffrey Greenberg, chairman and chief executive of Marsh, declined to discuss the effect of those investigations. He preferred to highlight the “strategic fit” between New York-based Kroll, which helped find the hidden assets of Saddam Hussein in the early 1990s, and his own company, which provides insurance brokerage services to corporate clients through Marsh Inc., money management through Putnam Inc., and consulting through Mercer Inc.

“We see this transaction as being able to help us serve clients more effectively with complementary services,” Greenberg said, noting Kroll’s expertise in employee background checks, data recovery and global restructuring advice, in addition to its traditional investigative work….

Given the growth potential and cost savings, Greenberg said that he expected the transaction to add to earnings in 2005. Still, some analysts expressed concern that the price was steep and noted the difficulty of cross-selling services.

Marsh now derives a little less that 10 percent of its $11 billion in revenues from risk-related consulting and processing services. But Greenberg said that heightened global security concerns and more stringent corporate compliance requirements had led to double-digit growth in the area.

Greenberg said he had approached Jules Kroll, whom he has known for about a dozen years, in February about a potential acquisition of the company that he founded. Jules Kroll owns about 7 percent of the company is its executive chairman.

Upon the deal’s completion, Kroll will become part of the risk and insurance subsidiary of Marsh.

Michael Cherasky, Kroll’s chief executive, will run the new unit and Jules Kroll will serve as vice chairman….


October 15, 2004

MMC Names New Chairman,
CEO at Marsh Inc.

Insurance Journal

Marsh & McLennan Companies Inc (MMC) on Friday announced a change in the management of Marsh Inc., its risk and insurance services subsidiary.

Michael Cherkasky has been named chairman and chief executive officer of Marsh Inc. effective immediately.

Formerly CEO of Marsh Kroll, MMC’s risk consulting subsidiary, Cherkasky has a record as a manager, prosecutor, investigator, and trial attorney. He joined Kroll in 1994, rising to the position of president and CEO in 2001.

Prior to joining Kroll, Cherkasky spent 16 years in the criminal justice system, including serving as chief of the Investigations Division for the New York County District Attorney’s Office.

Cherkasky succeeds Ray Groves, who has served as chairman and CEO of Marsh since 2003. Groves will become senior advisor to Marsh. Roger Egan will continue as president and chief operating officer of Marsh Inc.

Jeffrey Greenberg, chairman and CEO of MMC, said, “Since learning about the Attorney General’s allegations, we have taken strong and immediate action. We are committed to determining the facts, and we will take all appropriate action to deal with any incidence of wrongdoing and assure we are serving the best interests of our clients. Mike’s appointment as chairman and chief executive officer of Marsh recognizes the new additional priorities that the company faces….

“Pending completion of the investigation, we have suspended market service agreements (MSAs), and we are actively reviewing every aspect of Marsh’s business to identify and stop any practices that might encourage behavior that is inconsistent with our values and commitment to the highest professional and ethical standards.

“We thank Ray for his service to Marsh and look forward to his contributions in his new role.”


July 23, 2004

The Enemy Within

By Seth Lubove, Forbes

Riot police fired rubber bullets and tear gas at protesters in Rio de Janeiro in 1998 when Brazil broke up and privatized its massive state-owned monopoly phone system, Telebras. For Brasil Telecom, one of the original Telebras companies, the fighting hasn’t stopped since.

In a transatlantic feud that has landed in courts and government agencies on three continents and the Caribbean, and sullied the reputations of Citigroup (nyse: C) and now, potentially, J.P. Morgan Chase’s star investment banker Jimmy Lee, Brasil Telecom and its feisty Italian-born female boss have waged a fierce battle over control of the company with its second largest shareholder, Telecom Italia. The Italian communications conglomerate owns a 19% stake in the holding company that controls Brasil Telecom, although even that amount is the subject of a furious battle over whether the Italians can increase their stake to their original 37%, before regulatory requirements forced the company to reduce its holdings.

“This is a breach of the fiduciary duty a shareholder has with a company,” complains Brasil Telecom Chief Executive Officer Carla Cico, 43, referring to Telecom Italia’s war of attrition, the subject of various arbitrations, lawsuits and regulatory actions. “The result today is Brasil Telecom’s stock is undervalued.”…

Now, a fresh firestorm has erupted over allegations that Brasil Telecom hired private investigators at Marsh & McLennan’s Kroll unit to spy on Brazilian government officials and look into whether Telecom Italia has conspired to secretly undermine Brasil Telecom so it could take the company over on the cheap.

Both Kroll and Brasil Telecom acknowledge Kroll was hired, but say media reports that Kroll spied on Brazilian officials to check if they were aligned with Telecom Italia are bogus.

“Brasil Telecom never asked Kroll to investigate any member of Brazil’s government, and we never did,” said Kroll’s regional managing director for Latin America, Andres Antonius, in a statement….

Forbes obtained a copy of the Kroll report and related summaries. The 44-page report includes no reference to government officials. Among many other things, however, the report does allege that J.P. Morgan Chase, and Vice Chairman Lee, aided Telecom Italia in a conspiracy campaign by arranging a secret financial transaction that helped to further undermine Brasil Telecom.

Kroll claims in the report and in related summaries that Chase orchestrated a complicated financing scheme with a separate company in 2000 that allowed Telecom Italia to swoop in and buy out a corporate network services company that Brasil Telecom was set to acquire for itself, despite the fact that Telecom Italia participated in Brasil Telecom’s board discussions about the acquisition.

The network services company, Vicom, was instead acquired by something called Globo Cabo (now Net Services), a Brazilian cable operator that Telecom Italia had been “secretly” negotiating with, according to a summary of the Kroll report.

In March 2000, Telecom Italia met with Globo to discuss a deal in which Globo could invest in Brasil Telecom if Telecom Italia was successful in taking the company over, a violation of Brasil Telecom’s shareholder agreement, according to the report….

According to the summary of the Kroll report, Chase “benefited from the fraud” by earning fees and shifting the risk associated with the financing of the venture away from Globo to Telecom Italia’s stronger balance sheet, while also obfuscating Globo’s debt ratings….

Citigroup, meanwhile, has been dragged into the mess due to its investment, reportedly $700 million, in DVC/Opportunity Partners (as in “Citigroup Venture Capital”), a Brazilian fund that invests in newly privatized industries. The fund, in turn, owns a controlling stake in the holding company that ultimately controls Brasil Telecom, and which is aligned with management against Telecom Italia.

Much to the American bank’s likely aggravation, Citigroup’s name has been regularly trotted out in stories about the feud, despite the bank’s contention that it has no “controlling interest” in Brasil Telecom, according to a spokesperson who otherwise declined to comment on the feud….

For more on Citigroup, GO TO > > > Vampires in the City


October 27, 2004

Brazil Raids Kroll Offices
in Spy Probe

Forbes, Associated Press

Police raided the Brazilian offices of international security consultant Kroll Inc. and arrested five employees in an investigation into allegations of illegal spying by Kroll during the company’s probe of a nasty corporate dispute.

Authorities seized computers, documents and “sophisticated electronic eavesdropping equipment” in searches of 16 offices and homes in five cities in an operation dubbed “Operation Jackal,” federal police said. The searches included Kroll’s Sao Paulo offices and firms that do business with Kroll.

Five Brazilians Kroll workers were arrested on conspiracy charges. Kroll is owned by U.S. insurance giant Marsh & McLennan Cos., which is engulfed in a scandal involving alleged bid rigging and price fixing.

The investigation began in July after Brazil’s largest newspaper reported Kroll obtained copies of e-mails written by a top adviser to President Luiz Inacio Lula da Silva in the course of its investigation for Brasil Telecom Participacoes SA.

Police Wednesday also searched the Rio de Janeiro headquarters of Brazil’s Opportunity Bank and the offices of Brasil Telecom, the country’s third largest fixed-line operator. Opportunity controls Brasil Telecom.

The homes of Brasil Telecom chief executive Carla Cico and Opportunity founder Daniel Dantas were also searched, but they were not arrested or charged, said Romero Menezes, a high-ranking federal police official.

“We are still sorting through the wealth of documents obtained in the searches,” Menezes said. “More arrests could follow.”

Kroll spokeswoman Jodie Rosenbloom said the company is cooperating with authorities and denied breaking Brazilian laws.

“We categorically deny that we have done anything wrong,” she said. “We always act within the laws of Brazil and all of the countries in which we do business.”

Kroll also defended the employees, saying the company is confident they broke now laws “and that the allegations against them and our company will eventually be proven false.”

No eavesdropping equipment was found in Kroll offices, but police may have found devices capable of detecting eavesdropping equipment, the company said.

Communications Minister Luiz Gushiken said in July that he was spied upon before he was appointed. He called the surveillance “illegal” and said it was being investigated by Brazil’s Justice Ministry.

Kroll obtained several e-mails written by Gushiken during the firm’s investigation of Telecom Italia SpA for Brasil Telecom.

The e-mails were written before Silva took office last year and appointed Gushiken. But the minister has long been an important player in Silva’s Workers Party. Kroll also obtained e-mails written by Cassio Casseb, who now heads the government-controlled Banco do Brasil, Brazil’s largest bank.

Menezes said authorities found no evidence indicating Kroll or contractors eavesdropped on any current government officials.

Brasil Telecom claims it was forced by Telecom Italia to pay too much money for the purchase of Brazilian fixed line Companhia Riograndense de Telecomunicacoes, SA, or CRT, in 2000. Telecom Italia has been fighting for years for control of Brasil Telecom….

Kroll, which conducts investigations for many of the world’s largest corporations, was bought by Marsh & McLennan, the largest U.S. insurance brokerage company, for US$1.9 billion in July.

Marsh & McLennan chairman and chief executive Jeffrey W. Greenberg resigned Monday, less than two weeks after the company was accused by New York state Attorney General Eliot Spitzer of forcing businesses to pay more than necessary for property and casualty insurance.

Former Kroll chief executive Michael Cherkasky was appointed to succeed to Greenberg. Cherkasky is also a former prosecutor.

Marsh & McLennan shares fell 18 cents to close at $28.69 Wednesday on the New York Stock Exchange. They’ve dropped 38 percent this month, since Spitzer filed the civil charges.


July 08, 2002

Kroll to buy training firm

by Wendy Blake, New York Business

Manhattan-based security services company Kroll Inc. has bought a training firm in an effort to strengthen its position in the counter-terrorism market.

Kroll, which has seen demand for its services soar since the events of Sept. 11, is buying Crucible of Falmouth, Va., which has been called on by the government for such assignments as providing security training for U.S. police officers in Kosovo and Indonesia and managing protective details for U.S. officials in Haiti.

The company’s 18-person staff will join Kroll, which provides risk consulting to government agencies and businesses.

Terms of the deal weren’t disclosed.

For more, GO TO > > > The Eagle Hooded: The 9-11 Coverup


November 11, 2002

Diversification makes business
a Kroll model

Smart buys at right time boost profits, stock

Security and investigation firm Kroll Inc. is going through an identity crisis—and loving every minute of it.

For most of its 30 years, Manhattan- based Kroll was known as the go-to company for investigating corporate crime and high-profile cases. Its bread and butter was
handling everything from chief executives being stalked to governments looking for
hidden assets: Kuwait hired Kroll 11 years ago to locate Saddam Hussein’s investments abroad

These days, Kroll is just as likely to get a call from a company that’s liquidating its
assets or restructuring. One of its executives, Stephen Cooper, is the acting chief
executive of
Enron Corp.

Series of acquisitions

In a year when most companies are downsizing, Kroll is growing like never be-
fore. A series of acquisitions—including the purchase of restructuring firm Zolfo
— means that revenues this year should reach $285 million, up 38%. The company is expected to report a profit of $19.8 million, or 61 cents a share, compared with a loss of $21 million last year.

18% from investigations

Today, only 18% of Kroll’s revenues come from investigations, compared with
nearly 40% last year and nearly 100% just a few years ago.

“We want to be a company that is fine in good times and bad times,” says Michael
Cherkasky, who’s been president and chief executive of Kroll since May 2001.

Part of Kroll’s recent success is due to timing. Since Sept. 11, there is more demand for security services and intelligence.

The other part is due to its corporate reinvention.

We really look at ourselves as a new company,” observes Mr. Cherkasky.

In 1997, an armored car manufacturer named O’Gara-Hess & Eisenhardt acquired Kroll, a private firm founded by Jules Kroll. The new entity, called Kroll-O’Gara Co., was traded on the Nasdaq. But the marriage was uneasy: The companies, which were managed separately from two different headquarters, were plagued by in-
ternal bickering.

After four years, the Kroll side took control and sold the O’Gara portion, pocketing $53 million in cash. It used its windfall to help pay down $76 million in debt. The remaining debt was turned into unsecured convertible notes, which Kroll executives
now expect will be converted into equity because the firm’s stock price has risen. Its shares are up 29% since the end of last year, trading at about $19.50 today.

Driving the company’s most dramatic growth and its future potential are two ac-
quisitions made this year. In June, Kroll bought OnTrack Data International Inc., the nation’s largest data recovery firm, and in September, it acquired Zolfo Cooper.

Getting a well-recognized name in corporate restructuring is a feather in its cap,” says Ben Perks, chief financial officer of Denver-based Navigant Inc., a Zolfo Cooper rival.

In fact, Navigant itself had hoped to acquire Zolfo Cooper. “It was a coveted bou-
tique,” says Mr. Perks.

More acquisitions possible

The corporate restructuring business is booming because of the large number of
troubled firms
. Furthermore, companies like Kroll are likely to be able to grow by acquiring rivals or groups of specialists, since accounting firms will have to jettison their units that perform restructuring work

“You are starting to see a spinning off of these specialized businesses, like bankruptcy reorganization, says Mr. Perks. *

The payoff can be substantial. In just one month, Zolfo Cooper generated $7 million in revenues for Kroll. It also brings Kroll more financial predictability: Its work with Enron, for example, will keep money flowing in for at least another four years, Mr. Cherkasky says.

That’s a good thing, because Kroll’s revenues from investment banks and law firms
involved in IPOs and mergers and acquisitions dried up 18 months ago. While this
loss of due diligence work is painful, it’s not crippling, insists Mr. Cherkasky, since no single client represents more than 3% of the company’s revenues.

Because Kroll no longer relies on any one business line to carry it, analysts’ ratings are unanimously positive. Goldman Sachs and Credit Suisse First Boston initiated
coverage within the past couple of weeks, assigning “market outperform” ratings.

While a cash horde of $67 million gives Kroll financial strength, the bullish ratings are mostly based on its ability to pick up more business from existing customers and
to add more clients like Enron, which will be a source of revenue for many years.

Mr. Cherkasky is well-aware of what Wall Street expects from Kroll. He says he is focusing on capitalizing on new customer relationships and cross-selling services. Only 50 of Kroll’s largest 100 clients buy more than one service from the company, he says. “There is an enormous opportunity,” he observes.

Managing growth

But even some of Kroll’s boosters are worried about its rapid growth. It has acquired 14 companies since 1998, and experts see the need for another layer of management to help digest so many parts.

In the near term, however, another good year seems almost certain. Equity research firm Sidoti & Co. is predicting that Kroll will post a 150% increase in earnings in fiscal 2003, reaching $49 million.

“Kroll has business now that can help in an up cycle or a down cycle,’’ says David Gold, an analyst with Sidoti….

* See also: The Eagle Hooded: The 9-11 Coverup


Experts Warn of Potential
Avian (Bird) Flu Pandemic

With increasing urgency, many national governments, non-governmental organizations, industry groups, and media outlets have trumpeted the dangers of avian influenza, commonly called “Avian flu.” Of the 231 people known to have been infected with avian flu as of late July, 133 have died. The virus has spread from birds to humans largely through contact with infected birds. The possibility that the virus will mutate to allow sustained human-to-human transmission has health authorities on high alert.

According to the World Health Organization, attack rates reached 25-30% of the total population during past pandemics. Under the best circumstances, assuming that the new virus causes mild disease, the world could still experience an estimated 2 million to 7.4 million deaths (projected from data obtained during the 1957 pandemic). Projections for a more virulent virus are much higher. The 1918 pandemic, which was exceptional, killed at least 40 million people. In the USA, the mortality rate during that pandemic was around 2.5%.

The World Bank estimates an avian flu pandemic could cause $800 billion in economic damage and disrupt virtually the entire world economy. An outbreak of avian flu will severely test even the best-laid business continuity plans, and businesses should be well advised to review and revise their plans in the light of this threat. As such, businesses should prepare for a potential bird flu pandemic, ensure their crisis management, emergency response, humanitarian support and business recovery plans are up-to-date and include specific planning for dealing with the loss of personnel during a pandemic….

Kroll provides resources and services to assist global corporations understand the possible impacts of an avian flu outbreak, and with the development of strategic and tactical plans to reduce those impacts.


January 8, 1996

The French, the CIA and the
Man Who Sued Too Much

By David Ignatius, The Washington Post

William Lee is a 57-year-old Harvard-educated corporate lawyer whose specialty, until recently, was international mergers and acquisitions. But a year ago, the government of France charged that he was a spy for the Central Intelligence Agency, waging a secret war to destabilize French corporate interests in Asia.

The ” William Lee affair,” as it is known in Paris, appears to be a bizarre case of mistaken identity. Top CIA officials say the agency has no connection to Lee, and the French have dropped their allegations. But it adds a strange new chapter to what is becoming one of the world’s hottest spy rivalries, now that the Cold War is over — the battle between France and the United States over economic espionage.

The story also opens a window on a side of France not often seen by outsiders — the tightly interconnected world of big business and political elites that Lee calls “France Inc.”

It is the tale of a foreign lawyer who filed a lawsuit against a powerful French company — and then found himself the target of what he sees as a campaign against him involving not only company executives but senior French government officials and intelligence operatives.

The Lee affair began to get nasty last Jan. 26, when French Interior Minister Charles Pasqua summoned U.S. Ambassador Pamela Harriman to complain about American spying against France. As has been widely reported, Pasqua demanded that several CIA spies leave the country.

What has not surfaced publicly until now is that one of the people initially on Pasqua’s list was Lee — a corporate attorney who had spent 20 years in Paris with Shearman & Sterling, a leading international law firm.

CIA and State Department officials, who independently confirmed that Pasqua had named Lee, said they were mystified by the allegation. The agency had nothing to do with the lawyer, they assured Harriman. She repeated those assurances to Pasqua when she met with him again Feb. 10. U.S. sources say the French official warned her darkly that the CIA might be lying, but his ministry proceeded to focus on five other spy cases.

When the Paris spy scandal finally surfaced Feb. 22 with a leak to the French newspaper Le Monde, Lee was not on the list.

But his troubles were not over. He was summoned April 11 to the U.S. Embassy in Paris. The embassy security officer warned him that his life was in danger and advised him to leave France immediately. When he arrived in Washington the following week, a deputy assistant secretary of state named Mark Mulvey told him to take the death threats seriously.

Which brings us to the question: Who is William Lee, and what had he done “to drive the French crazy,” as one U.S. intelligence official put it?

The answer to this mystery appears to lie in a lawsuit Lee filed in 1993, challenging the merger of two big French companies — the arms maker Matra and the publishing giant Hachette.

The suit argued that the December 1992 merger had cheated Matra shareholders because it had not taken into account a secret contract worth roughly $1.5 billion, signed the previous month, to sell Matra missiles to Taiwan.

Lee said he filed the class-action lawsuit mostly for the same reason lawyers usually file such suits — to make money, in this case a share of a settlement that could total many millions of dollars.

But to jittery government and business leaders in Paris, the challenge to a big French defense company appeared to be part of a broad CIA plot to undermine France’s corporate interests. The French believed the CIA had helped torpedo contracts for French firms in Saudi Arabia and Brazil, and they saw the assault on Matra as another example of CIA meddling.

Nonsense, said State Department and CIA officials.

“What you have here is a mix-up of two stories,” said a State Department official who was closely involved in the case. “One was the spies. The other was Lee. In the real world, they had nothing to do with each other. But in the minds of the French at the time, they were connected.”

Even Matra now seems convinced the French authorities had the wrong man. “We don’t believe that Mr. Lee is an American spy,” said a Matra spokesman. Instead, the spokesman said, “Matra is exploring whether a French competitor might have sponsored Lee’s actions, including the lawsuit.”

What made Lee’s lawsuit so explosive, all sides agree, was a September 1994 letter his lead plaintiff sent to the president of Taiwan, with copies to then-Prime Minister Edouard Balladur and other French officials.

The letter warned that the lawsuit could disclose commission payments that had been made by Matra and other French companies on arms sales to Taiwan — and the kickback of some of those payments to French politicians.

Lee acknowledged during several long interviews that he had no hard evidence of such a scandal, and it is unclear whether the allegation was anything more than a bold bluff. But, he said, “I think that letter . . . in effect, took on France Inc.” And it was the French reaction, he argues, that reveals how power in that country really works.

“The system resembled that of Italy, Japan or South Korea, where government bureaucrats (including intelligence agencies) and large companies worked hand in hand,” he said. “Companies begin to feel immune from normal legal rules.”

On the surface, Lee’s resume seems so bland he might almost be one of those Alfred Hitchcock characters who stumble unintentionally into a web of intrigue. But there is also something elusive about Lee — a face that defies easy ethnic categorization; a lavish, expatriate lifestyle; a penchant for taking risks — that may have added to French suspicions.

The son of a prominent Chinese-American rocket scientist and a German mother, he graduated from Stanford in 1960 and spent six years with the State Department. He left government in 1966 for Harvard Law School and then joined Shearman & Sterling, moving to Paris for the firm in 1972. He remained there for 20 years, becoming head of the firm’s Paris office and one of the leading American lawyers in France. But he and the firm parted company in 1992. Lee said he was restless with his traditional corporate law practice — finding it too staid and bureaucratic — and decided he could have more fun and adventure as an entrepreneur.

Some of the French anxiety about Lee stems from what he did next. In mid-1992, he took a part-time position with Kroll Associates, a New York firm that provides investigative services for big companies and employs a number of former CIA and FBI officers.

For French officials, Lee’s brief stint with Kroll tagged him as a suspicious person. According to French and U.S. sources, the French equivalent of the FBI, known as the Directorate of Surveillance of the Territory, or DST, suspected that Kroll’s Paris operation was a CIA front. They bugged Kroll’s Paris offices and harassed some of its clients, according to company executives.

Jules Kroll, the firm’s chairman, says the French suspicions are groundless. “We don’t work for anyone except our clients,” he said in an interview in his Manhattan headquarters — “and that doesn’t include the CIA.”

But the French suspicion that Lee and Kroll were corporate spies cannot be understood without some background. For nearly a decade, the United States and France have been locked in an increasingly bitter quarrel over economic espionage.

The economic spy war began to heat up in 1989, when the Bush administration concluded that the French were trying to steal secrets from U.S. companies, here and abroad. The FBI expelled several French agents and warned U.S. companies to be on guard against French spying.

It was France’s turn to become indignant in 1993, when the Clinton administration began using the CIA more aggressively to gather information about foreign trade and economic issues. An article last month in the French magazine Le Nouvel Observateur cited several instances of what the French viewed as U.S. dirty tricks, including work by U.S. intelligence agencies that helped U.S. firms beat out French companies for a $6 billion airline contract with Saudi Arabia and a $1.4 billion contract for a surveillance system in Brazil.

Several top U.S. intelligence sources confirm that the CIA was indeed mobilizing its stations around the world in 1993 and 1994 to gather information about French business practices so as to “level the playing field.” One agency source confirmed that as part of this effort, the CIA obtained evidence of improper French commission payments to officials in Brazil.

“The priorities were to find out where French companies were bribing people around the world to get contracts, and what they were doing to spy on U.S. corporations,” recalled one top intelligence source. This aggressive program was justified, the source said, because “except for the South Koreans, the French are the only American ally that systematically conducts extensive espionage operations against us.”

Lee entered this minefield in 1993 when he decided to bring his lawsuit against a big French defense company.

The Matra-Hachette merger was already controversial in Paris. For years, both companies had been run by Jean-Luc Lagardere, one of France’s most aggressive and successful businessmen. Critics argued that Lagardere had used his healthy defense company to bail out Hachette, a venerable French media company that had been rocked by the 1991 collapse of an effort to create a new television network.

Lee’s bold stroke was to challenge the merger through a shareholder class-action suit — a common tactic in the United States but one almost unheard of in France. The goal of the suit from the beginning — in addition to challenging what Lee viewed as an unfair merger — was to force Lagardere to offer a financial settlement. “It was a no-brainer,” Lee recalled in an interview. “We knew that France was ripe for introduction of U.S. legal tactics.”

The suit was filed in France in June 1993. The Matra shareholders argued that because Matra’s contract for sale of missiles to Taiwan, which was secret, had not been included in the formal estimate of Matra’s worth, their shares had been undervalued.

Matra officials immediately began searching for the culprits who might be behind this legal assault. “The whole thing appeared bizarre from the beginning,” recalled a source close to Matra. “In June 1993, we hear the name Lee. We ask, `Who is Bill Lee?’ What we hear frightens us — that he’s . . . {with} Kroll. The first reaction is to believe it is a Kroll operation for some American competitors.”

The case bumped along in French courts, with Lee and his plaintiffs losing the initial battles. The courts accepted Matra’s arguments that its valuation calculations had included the Taiwan contract.

But Lee said he still hoped to win a lucrative settlement, and in the summer of 1994, an emissary proposed that Matra pay about 150 million French francs, or roughly $30 million, to settle the case. Matra said no, and a company spokesman complained to the French press about “extortion.”

On Sept. 16, 1994, the Lee forces raised the ante. Jean-Pierre Malen, a French accountant who was Lee’s lead plaintiff, sent the incendiary letter to the president of Taiwan asking his assistance.

The letter cited Taiwan’s unusually large down payment on the Matra missile deal, which according to Taiwan press reports may have totaled roughly $800 million, and charged that a “large portion of the down payment…was funneled back to your country to finance certain party activities of the ruling party.” It also claimed that Taiwanese officials could face criminal action for “bribing French government officials and their relatives.

Asked to comment on the letter, the Matra spokesman said, “We strongly deny that there was anything improper or illegal about this contract.” And Lee now concedes that his legal team did not have hard evidence of wrongdoing. The criminal complaint outlined in the letter was never filed.

But in the cozy salons of France Inc., the September letter exploded like a stink bomb — and some very strange things began to happen to William Lee .

He was placed under surveillance by French intelligence, according to Lee and French sources. And one of his former employees was recruited by French intelligence to inform on her ex-boss.

Florence Drillon, 50, an administrative assistant, said in an interview that two officials of the DST showed up at her Paris apartment in October 1994 and began asking questions about Lee. They showed her French penal code language warning that anyone maintaining contact with a foreign intelligence agent “could be sentenced to 10 years in prison and a 1 million franc fine.”

Drillon said she was uncomfortable with the DST request but passed along some minor information about Lee’s schedule. She was unemployed at the time, and she said the DST officers suggested that, if she cooperated, they would help her find a job.

Malen, the lead plaintiff in the suit, said he also was contacted by the DST. “This government entity criticized me for the letter I had sent to the Taiwan government,” he said.

Despite efforts to negotiate a truce, the Lee affair detonated in January 1995, when Pasqua summoned Harriman. U.S. officials believe the French — who had been looking for months for evidence of American dirty tricks — thought they had found a perfect example in Lee. They also suspect that Pasqua, who was in political trouble at the time because of a scandal involving the wiretapping of French citizens, was looking for a diversion.

U.S. officials speculate that Lee was pushed onto the list by Pasqua’s intelligence advisers. According to U.S. and French accounts, these advisers operated what amounted to a private intelligence network, with contacts in key positions in French intelligence and big French companies. Even prominent French officials talk about their activities in code, using phrases such as “third force” or “black hand” to describe the secret network.

Pasqua’s office in Paris said last week he would not respond to questions about the Lee affair.

By February, Pasqua had shelved the allegation that Lee was a CIA agent. But Lee still had some powerful enemies.

On Feb. 23, the French daily Liberation published an article alleging that Lee was a CIA spy. The story explained the background of the Matra case, in the airy style of French newspapers:

“The firm {Matra}, worried to see its image and contracts in question, asked the French secret services to tap this lawyer {Lee}, to follow him and check his accounts so as to determine his sleeping partners. After about three months’ investigation in the United States, Europe and Asia . . . the DST affirms to hold proof that this man works for the American services (which the interested {party} denies, of course). . . .”

Matra immediately issued a statement calling the Liberation report “fiction” and insisting that the company “was never involved in the actions of the French administration and government.”

Lee said he began to receive death threats in late January. The most chilling was a call his fiancee took from a man with an American accent: “You bitch,” said the caller. “We’ll get him, and we’ll get you, too.”

Rumors also began to circulate in Paris in February that a contract had been taken out on Lee’s life, according to U.S. and French sources. In one version, a French mobster planned to lure Lee to the former Soviet Union, where he would have an accident. Another version had it that a Chinese Triad underworld group in Taiwan had been hired to kill Lee. A bizarre third version, provided by a French intelligence source to a journalist, had it that the CIA was planning to kill Lee, because he was an erratic agent.

The CIA began to collect intelligence about the death threats, and in April, Lee was hastily summoned to the U.S. Embassy in Paris and advised that his life was in danger. Later, according to a U.S. counterintelligence source, questions were raised at the CIA about the reliability of their source for the death threats. But at the time, officials agreed, they had no choice but to inform Lee.

Lee left Paris immediately after receiving the warning from the U.S. Embassy and flew to London. There he had scheduled a secret rendezvous to discuss the case with a top executive of Matra, Jean-Louis Gergorin. Gergorin told Lee that Matra had a powerful interest in protecting him. If the death threats were real, he said, Matra would be blamed if anything happened.

There were other efforts to protect Lee’s life. A senior U.S. Embassy diplomat visited the French Foreign Ministry to warn that if anything happened to Lee, questions would be asked in Washington. Matra even discussed the problem with Kroll, the American private detective.

Kroll said he used his contacts in Asia to pass a message to the Chinese Triads that it would be a great mistake to go after Lee.

Weeks and months passed without any harm to Lee, and fears that his life was in danger gradually eased. Lee, who now lives on New York’s Long Island, says he is not sure whether the assassination threats were real. They may simply have been an attempt to intimidate him.

The Balladur government — including the interior minister, Pasqua — was swept from office in May with the election of Jacques Chirac as president. And Lee finally got some encouragement from the French legal system two months ago, when a French appeals court heard arguments on his original lawsuit challenging the Matra-Hachette merger. The “advocate general,” a kind of official “friend of the court” in French cases, advised that the court should appoint an expert to assess the valuation of the Matra shares, which was one of the demands Lee’s shareholders had made.

The appeals court is scheduled to announce its decision Jan. 16….


December, 2001

Whatever Happened To The WTC
Hard-Drive Recoveries?

From The Seventh Fire

Moments before the World Trade Towers collapsed, $100 million in credit card transactions were sent through the computers inside the doomed buildings, transactions that should have vanished when the buildings collapsed. But a German company was able to recover data from the hard drives pointing to WHO, armed with advance knowledge, executed this monstrous fraud.

But the company doing the data recovery was bought out, the project halted, while the FBI, as usual, does not look where it is told not to look.

December 17, 2001

“PIRMASENS, Germany (Reuters) – German computer experts are working round the clock to unlock the truth behind an unexplained surge in financial transactions made just before two hijacked planes crashed into New York’s World Trade Center on September 11.

Were criminals responsible for the sharp rise in credit card
transactions that moved through some computer systems at the WTC
shortly before the planes hit the twin towers?

Or was it coincidence that unusually large sums of money, perhaps
more than $100 million, were rushed through the computers as the
disaster unfolded?

A world leader in retrieving data, German-based firm Convar is trying
to answer those questions and help credit card companies,
telecommunications firms and accountants in New York recover their
records from computer hard drives that have been partially damaged by fire, water or fine dust…”

The CONVAR data salvage has made it completely clear that more than $100 million in insider credit card transactions took place in the hours and minutes before the twin towers collapsed. The mainframe computers in the towers processed these transactions; and the credit card data would have been lost forever had it not been for the successful data reconstruction of the CONVAR specialists.

A German company, CONVAR of Pirmasens near the French border, was given more than 400 computer hard drives from the wreckage of the World Trade Center. These are extremely sensitive computer components that went through the collapse of the World Trade Center.

Using blue laser technology, CONVAR succeeded in reconstructing all the data from the computer debris. This includes diverse financial data and telecommunication protocols up to a few seconds before the collapse of each tower. (Source: e-mail from CONVAR Germany on October 16, 2003.) The U.S. government’s blatant lie about the allegedly missing black boxes is outright made ludicrous by this fact.

The reconstructed data was given by CONVAR to the FBI.

The FBI was held by law to investigate, based on the reconstructed data, who placed the inside transactions. The FBI is doing no such thing.

“GFP would like to inform, that in June 2002, Ontrack/Convar was acquired by Kroll Inc. (Kroll O’gara Eisenhardt), which has strong ties with the US Government. One of their former employees, Jerome Hauer, organised a security job for ex-FBI anti-terror chief John O’Neill in the Twin Towers, where he died on Sep 11th….”

Kroll O’ Gara Eisenhardt is one of the oldest security companies in the United States and, some say, responsible for every U.S. President since the end of WW2.

What does an upstanding, powerful company like Kroll do in its spare time? Why it trains local forces in Saudi Arabia, of course!

One partner of Kroll, Cable & Wireless provides training in Counter-Terrorism and Urban Warfare in Saudi Arabia. In August 2001, former Kroll employee, Jerome Hauer, arranged a security job in the Twin Towers for FBI Agent John O’Neill. At the time, O’Neill had been investigating ENRON’s business deals with the Taliban and was subsequently pulled from that investigation.

Neither Kroll nor Hauer was asked to testify about this coincidence. Jerry Hauer has been around a bit – Batelle, Dyncorp, SAIC….

Look at the interesting resume of the president and chief executive officer of Kroll Inc.Michael G. Cherkasky.

“He is a former chief of the Investigations Division for the New York County District Attorney’s Office where he investigated fraud, corruption, money laundering, organized crime figures such as John Gotti, and the 1993 bombing of the World Trade Center.”

And look at this interesting history & connections:

Kroll Associates, a security consultant firm, which was renamed to Kroll Inc. in August 2001, started in New York City in 1972. In December 1997, Kroll merged with armored car manufacturer O’Gara-Hess & Eisenhardt to form The Kroll-O’Gara Company.

O’Gara is responsible for the security of all US-Presidents since 1945. However the background of Kroll is very interesting, too:

In 1993, Maurice Greenberg’s American International Group (AIG), became co-owner of the “private spy agency”, Kroll Associates, as a result of rescuing Kroll from bankruptcy with a cash infusion. Kroll was notorious during the 1980s as the “CIA of Wall Street” due to the prevalence of former CIA, FBI, Scotland Yard, British secret service and British Special Air Service men Kroll employed for corporate espionage in takeover bids, as well as for destabilization of foreign nations.

Maurice Greenberg was deeply involved in Chinese trade in the 80s, where Henry Kissinger was one of his representatives. In the China trade, Greenberg became very close to Shaul Eisenberg, the leader of the Asian section of the Israeli intelligence service Mossad, and agent for the sales of sophisticated military equipment to the Chinese military.

Maurice Raymond Greenberg was born in New York City May 4, 1925, the son of Jacob Greenberg and Ada (Rheingold) Greenberg. The young man adopted the nickname “Hank” to make people think of a popular American baseball player with the name, Hank Greenberg. Greenberg served in the U.S. Army in the Korea conflict. He joined the insurance firm, Continental Casualty Co., in 1952.

Continental executive J. Milburn Smith recommended Greenberg to the C.V. Starr insurance/spy organization, which made Greenberg its vice president in 1960, its president and CEO in 1967, and its chairman, succeeding Starr, in 1969.

From 1988 to 1995, Greenberg was a director of the New York Federal Reserve bank – this branch of the system is the main instrument through which Federal Reserve chiefs and the Bank of England traditionally execute their U.S. political-economic policy. Greenberg was deputy chairman of the New York Fed in 1992 and 1993, and New York Fed chairman in 1994 and 1995.

During 1996, while Greenberg was deputy chairman of the Council on Foreign Relations (See Cfr), he chaired the CFR task force on intelligence, which published “Making Intelligence Smarter: The future of U.S. Intelligence.” This report mostly served to exhibit Greenberg’s access to the intelligence community; but he parlayed it into a nomination by Senator Arlen Specter and others, for Greenberg to be Director of the CIA. Greenberg has used his connections to covert intelligence, supranational institutions, private bankers and speculators, and his huge global cash inflow, to shape a unique personal empire.

Since 1997, Frank G. Wisner, Jr., has been a board member of Kroll, and is currently Greenberg’s Deputy Chairman for External Affairs.

Wisner’s father was a founder of the U.S. Central Intelligence Agency, who killed himself over the scandal from his being duped by British-Soviet masterspy Kim Philby.

Frank Wisner, Jr., is a director of the George Bush-linked energy giant Enron (a client for whom AIG negotiated payments from Peru over nationalization of Enron operations).

In the early 1990s, Miami-based private investigator Lou Polumbo joined Kroll Associates. According to sources in the industry, Polumbo brought with him a personal history of involvement with the Medallin and other South American narcotics cartels; his business included helping relocate some of the capabilities of these cartels out of Colombia. The deal to bring Polumbo into Kroll was worked out by Avram Shalom, the former head of Israel’s Shin Beth secret police.

Shalom went to work for Kroll; he had been fired as Shin Beth boss due to a scandalous massacre of Palestinians in the Israel-occupied territories by his Shin Beth agents. – 911 ReviewAeryn_Sun

Is there any doubt remaining that Zionists are involved in 9-11 given their current activity in covering it up?

Liberty Forum

For more, GO TO > > > The Eagle Hooded: The 9-11 Coverup



June 29, 1999

One Man’s Ties Aided a
Scheme To Bilk Insurers


Financier Martin R Frankel was aided by Thomas J Corbally, businesssman consultant at Kroll Associates, in orchestrating spectacular insurance fraud that siphoned more than $300 million from insurance companies.

Corbally says he was duped into helping Frankel put veneer of credibility on his business dealings and had no inkling of suspected criminal plans, and pledges to cooperate with FBI and Federal authorities seeking answers about role in connecting Frankel to influential politicians, lawyers, businessmen and Catholic leaders year before insurance empire collapsed.

His ties to powerful people made him valuable contributor to Kroll, well-known private investigative agency usually enlisted by corporate America to scrutinize potential business partners and adversaries, and claims that he was duped has placed the company in an awkward position.

Kroll, retained in 1998 to scrutinize Frankel, quickly found potential problems with his operation. The inquiry apparently failed to uncover role of Corbally, who worked directly with president Jules B Kroll for almost 20 years, earned commissions on business he brought in, and had office at company’s Manhattan headquarters

For more, GO TO > > > The Frankel-stein Monster

# # #






For more tales of 9-11 cover-ups,











AIG: The Un-American Insurance Group

Aloha, Harken Energy

An Octopus Named Wackenhut

The Bad Faith Buzzards

Birds on the Power Lines

Birds that Drink from Cesspools

British Petroleum: Buzzards in the Pipelines

Buzzards on the Hill & Knowlton

Claims By Harmon

Condoleezza & The Chicken Hawks

Confessions of a Whistleblower

Conseco: Birds in the Trailer Park

Dirty Gold in Goldman Sachs

Dirty Money, Dirty Politics & Bishop Estate

Down the Rabbit-Hole

The Story of Enron

Global Crossing


Investigating Investcorp

Marsh & McLennan: The Marsh Birds

Marsh & McLennan’s Guy Carpenter

Marsh & McLennan’s Marsh Affinity Group Services

Marsh & McLennan’s Mercer Consulting Services

Marsh & McLennan’s Putnam Investments

Marsh & McLennan’s Seabury & Smith

Nests in the Pentagon

Of Vampires & Daisies

Rand Corporation

The Great Nest Egg Robberies

The American Red Double-Cross

The Eagle Awakes

The Indonesian Connection

The Kissinger of Death

The Mercenaries

The Nests of Osama bin Laden

New Songs by The Whistler

The Nuclear Nests

RICO in Paradise

The Secret Nests

The Silence of the Whistleblowers

The Sinking of the Ehime Maru

The Stephen Friedman Flock

The Story of Enron

The Strange Saga of BCCI

The United Defense Industries Matrix

Thorns in the Rose Garden

Transylvania Travelers in St. Paul

Uncle Sam’s Guinea Pigs

Vultures up to their beaks in Tesoro Petroleum

WHO’s Guarding the Hen House?

Zeroing In On Zurich Financial Services







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Last Update October 5, 2006, by The Catbird