Financial Transparency Coalition

By Marian Wang, ProPublica

NEW YORK – Despite having clear rules on when not to invoke the state secrets privilege, the Justice Department has been blocking disclosures about a dubious technology that could prove embarrassing for the U.S. government.

As the New York Times reported over the weekend, a computer programmer who claimed his technology could help the U.S. track terrorists received at least $20 million in government contracts [1] for this software, which intelligence officials suspected to be fake even in 2003. While contractor fraud isn’t new [2], what’s unusual here is that the U.S. isn’t trying to recover those funds or penalize the contractor, Dennis Montgomery.

Instead, it’s fighting in court to keep information about the technology secret, arguing that the details could compromise national security. The Times notes that the clampdown in this case started under the Bush administration and continued under Obama’s Justice Department:

The Bush administration declared that some classified details about the use of Mr. Montgomery’s software were a “state secret” that could cause grave harm if disclosed in court. In 2008, the government spent three days “scrubbing” the home computers of Mr. Montgomery’s lawyer of all references to the technology. And this past fall, federal judges in Montana and Nevada who are overseeing several of the lawsuits issued protective orders shielding certain classified material.

A 2009 memo from Attorney General Eric Holder laid out the circumstances in which the state secrets privilege could be invoked [3]. Preventing embarrassment and concealing inefficiency or error were not legitimate reasons, according to the memo:

The Department will not defend an invocation of the privilege in order to: (i) conceal violations of the law, inefficiency, or administrative error; (ii) prevent embarrassment to a person, organization, or agency of the United States government; (iii) restrain competition; or (iv) prevent or delay the release of information the release of which would not reasonably be expected to cause significant harm to national security.

The Justice Department wouldn’t comment to the Times about its dealings with Montgomery. (Montgomery also declined to comment and when asked at a November deposition whether his software was a “complete fraud,” he pleaded the Fifth, the Times noted.)

Use of the technology led to several false starts and dead ends over the years, including a 2003 scare that prompted U.S. officials to order that several international flights be turned around or grounded. It even led to discussion of shooting the planes down, according to the Times:

French officials, upset that their planes were being grounded, commissioned a secret study concluding that the technology was a fabrication. Presented with the findings soon after the 2003 episode, Bush administration officials began to suspect that “we got played,” a former counterterrorism official said.

The C.I.A. never did an assessment to determine how a ruse had turned into a full-blown international incident, officials said, nor was anyone held accountable.