zenpundit.com » Blog Archive » Tech Issues and the Stratfor Scandal

Tech Issues and the Stratfor Scandal

I am having some tech issues with posts – though as they do not seem to be impeding the vigorous blogging efforts of Charles Cameron, I suspect the problem is on my end. Highly aggravating.

That said, here’s a must-read news story. Potentially very, very wide ripple effects:

GizmodoWikileaks Reveals Privately Run CIA’s Dirty Secrets

….Stratfor’s clients are the US Government, other countries and military organizations, as well as private companies like Lockheed Martin, Northrop Grumman or Raytheon. They have a global network of spies in governments and media companies, including “secret deals with dozens of media organizations and journalists, from Reuters to the Kiev Post.” According to the emails, these spies get paid in Swiss bank accounts and pre-paid credit cards.

Wikileaks says that the emails also reveal the creation of a parallel organization called StratCap. Apparently, this organization would use Stratfor network of informants to make money in financial markets. Wikileaks claims that the emails show how then-Goldman Sachs Managing Director Shea Morenz and Stratfor CEO George Friedman put StratCap in motion in 2009.

Here are some of the highlights, according to Wikileaks:

Global network of informants

The Global Intelligence Files exposes how Stratfor has recruited a global network of informants who are paid via Swiss banks accounts and pre-paid credit cards.

Who are their spies?

Government and diplomatic sources from around the world give Stratfor advance knowledge of global politics and events in exchange for money. Stratfor has a mix of covert and overt informants, which includes government employees, embassy staff and journalists around the world.

How they control their sources

“[Y]ou have to take control of him. Control means financial, sexual or psychological control… This is intended to start our conversation on your next phase” – CEO George Friedman to Stratfor analyst Reva Bhalla on 6 December 2011, on how to exploit an Israeli intelligence informant providing information on the medical condition of the President of Venezuala, Hugo Chavez.

Using secret information to make money in financial markets

Stratfor’s use of insiders for intelligence soon turned into a money-making scheme of questionable legality. The emails show that in 2009 then-Goldman Sachs Managing Director Shea Morenz and Stratfor CEO George Friedman hatched an idea to “utilise the intelligence” it was pulling in from its insider network to start up a captive strategic investment fund. […] CEO George Friedman explained in a confidential August 2011 document, marked DO NOT SHARE OR DISCUSS: “What StratCap will do is use our Stratfor’s intelligence and analysis to trade in a range of geopolitical instruments,particularly government bonds, currencies and the like“…..


If I were George Friedman, I’d disappear about now.

I have never been overly impressed with Stratfor’s analytical prowess, having had readers, like Morgan, who from time to time sent me copies of their subscription level publication. Sometimes, Stratfor would produce spot on work but I found some of their forecasts to be marred by bizarre tangents and improbable assertions. Had I realized at the time that Statrfor’s real effort went into collecting inside information to play the markets I’d have been more generous in my assessment.

Geopolitical analysis was only Stratfor’s hobby. 🙂

16 Responses to “Tech Issues and the Stratfor Scandal”

  1. Charles Cameron Says:


  2. zen Says:

    Well, ridicule is the least of their worries.  Stratfor has burned a ton of VIPs with this scandal.. Moreover, there’s a second-order of shady folks in various companies, countries and agencies who are putting two and two together on how/why some deal fell apart, plus their informants whose names, I expect, will soon be made public. And the IRS is going to want to take a look at those financial records of Swiss bank accounts.
    A fall-out rich environment, Charles.

  3. Charles Cameron Says:

    There’s an email up at Pastebin which purports to be from George Friedman and contain his resignation announcement, but is titled “Draft” FWIW — if it’s not a spoof, I hope my fellow grammar-nerds will enjoy the sentence: 

    Please rest assured that this decision was not an easy.

    I say, “if it’s not a spoof” because once before, the address george.friedman@stratfor.com was used for Anon spoofing, as reported in a subsequent Stratfor email titled “Stratfor: Beware of false communications” sent January 6:

    Specifically, there is a fraudulent email that appears to come from George.Friedman[at]Stratfor.com.

    If the poor grammar belongs to Anon / AntiSec, it’s presumably all part of the spoof.
    And you know the way my mind works — it’s very biblical, really. Matt 10.26: “there is nothing covered, that shall not be revealed; and hid, that shall not be known.”

  4. Chris Says:

    The Stratfor statement is the usual first step for one of these events:

    Phase 1: Push back and say it doesnt matter
    Phase 2: Claim anything bad is fake
    Phase 3: Admit some of the bad things arent fake
    Phase 4: Admit most of the bad things are real
    Phase 5: Give up, go home.

    They’re already well on the way to copying the HBGary model.
    Will be interesting to watch how it all falls out. I can’t imagine that Stratfor was going to get many new subscribers after news of the original hack, and now its clear how much was lost all confidence will be destroyed.
    Wikileaks have been pretty good in the past at the drip torture method of data release, letting go of enough to keep the media publishing stories, and I think tactically it was very smart to use Wikileaks to share this. Two big brand names working together.

  5. Cheryl Rofer Says:

    Paid informants have their limitations: prone to inflate their importance/connections, provide what the buyer wants. This would account for the problems in Stratfor’s reporting that have put me off as well as Zen.
    As to the “control” quote, there has always been a lot of macho in Friedman’s presentation of himself. He probably even believes much of that by now. So this too is of a piece with the crummy reporting.
    I would think that the clients of whom we’d like to hear more (defense contractors, for example) are smart enough not to put stupid stuff into e-mails to people with Stratfor’s management’s obvious limitations. But you never know.
    A useful caveat is that responsible journalists insist on more than one independent source. Apparently Stratfor didn’t bother with trivia like that. It’s not a bad criterion to apply as the stuff comes tumbling out.

  6. J. Scott Shipman Says:

    Hi Zen,
    This news will probably mean the end of STRATFOR—their method of payment will get the IRS involved.
    @Cheryl, you hit the nail on the head with the problem with paid informants. And don’t underestimate the potential stupidity of defense contractors.
    Perhaps this is the ENRON of the private intel business? It will be interesting to see how much they were collecting from the USG and their proxies in the Congressional-military industrial complex.

  7. Kevin Says:

    You know, I mostly stopped watching bad tv and filled the time with things I considered slightly more productive, like reading your blog.  Today’s post makes me realize that on a certain level I’ve traded one soap opera for another. (I’ve never watched soap operas, but it seemed like the right way to put that.  Also, I very much enjoy your blog, you’ve contributed a large section to my antilibrary)

  8. Charles Cameron Says:

    Daveed Gartenstein-Ross @DaveedGR just tweeted:

    MT @dandrezner: RT @Stratfor Contrary to information circulating on the Internet, George Friedman has not resigned and remains CEO

    Yup: that “george.friedman” address was the tell.
    And now there’s a Stratfor statement, too:

    Under the continued leadership of founder and Chief Executive Officer George Friedman, Stratfor will not be silenced and will continue to publish the geopolitical analysis our friends and subscribers have come to rely upon.

    And then JM Berger @intelwire tweets:

    Why would he resign? All he has to do is take control of the media. Sexually.

    I’m just slowly catching up.

  9. Charles Cameron Says:

    And my, Shlok Vaidya @shloky has been having fun: 

    $1200/month to a source codenamed GERONIMO. Was Stratfor so amazing they had OBL as a source? 😉 http://t.co/8cVpRB1X

  10. ZZMike Says:

    The Really Big Question is, why doesn’t Stratfor encrypt some of their stuff, or at least put up roadblocks to keep people out?

  11. Scott Says:

    I really wasn’t impressed by either of his books – The Next Decade or The Next 100 Years.  Not only did I think his scenarios were implausible, I really didn’t like their Machievellian outlook.  Apparently he practiced what he preached, though…

  12. Charles Cameron Says:

    What about this treasure, Scott, from 1991?
    Cover of: The coming war with Japan by George Friedman

  13. zen Says:

    Great comments!
    Shloky had a field day with the story on Twitter 
    I am blown away by the degree to which Stratfor had a high level of trust to venture out of analysis into in-country intel collection and let’s be accurate, industrial espionage – not just by private VIPs but by a large number of smart ppl – I know some of them – with USG positions or relationships. Many of these ppl have been burned on their personal credit cards by Anon or will have sensitive, possibly work-related, email outed. A huge mess.

  14. Chris Says:

    As ZZMike notes above, why was this stuff not encrypted or at least somewhat protected. If you’re going to market yourself as the private sector CIA then you’ve got to get your head around securing your data. I really feel for your friends and colleagues Zen, who clearly had an expectation they could trust Stratfor with their information, they should be enraged with Stratfor as much as with the hackers who stole their information. In this day and age, when I can go onto Google and do a search for insecure servers (look up the phrase ‘google hacking’ or look at the service Shodan for more on this) it’s inexcusable for this to have occured.
    On the other hand, since the most tittilating thing found so far is the ‘analysis’ which suggests that Bin Laden was in touch with the ISI… I’m not sure I can take Stratfor seriously in any sense. I want to see something I couldnt find out with a mobile phone and access to Google.

  15. Charles Cameron Says:

    Dr Brenner is scathing about Stratfor on Pat Lang‘s blog, Sic Semper Tyrannis:

    They hustle; everything they do smacks of a hustle.  They exploit the student interns while playing on their desire to partake of the mysterious and the romantic.  Those they do hire for regular positions get the skimpiest of wages.  Expertise and languages are little valued.  Their hallmark tool is an electronic pair of scissors. One student had spent four years as an interrogator for the U.S. Army in Iraq and Afghanistan.  He served as an employee of a contract firm there. His first assignment as a junior member of the Stratfor team was to prowl around the Rio Grande Valley looking for stuff on the drug cartels; he never had been there before.

    — and there’s more of the same.
    See also Max Fisher‘s Stratfor Is a Joke and So Is Wikileaks for Taking It Seriously at the Atlantic.
    From here on in, hopefully we’re clear on Stratfor itself.
    What would still be of interest to me personally, though, would be any mention in the next five million emails of messianism, millenarianism, or mahdism — preferably not sourced from the BBC, NYT, SWJ etc.

  16. J.ScottShipman Says:

    Hi Charles,
    Dr. Brenner’s use of the word “hustle” is interesting. Walter McDougall in his Throes of Democracy (I’m about a third of the way through), called our public-at-large a nation of hustlers…if Brenner is right, Stratfor is continuing a tradition:) 

Switch to our mobile site