Wikileaks Goes After Research Firm

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Stratfor Global Intelligence, a geopolitical research firm based in Austin Texas, is now the victim of Wikileaks, which began publishing a series of internal emails yesterday.  Aside from the prurient appeal of perusing internal emails, it was unclear what ‘public good’ was accomplished by the leaks.

Stratfor was hacked last December by Anonymous which stole unencrypted credit card information of Stratfor customers, as well as over 5 million internal emails which were then turned over to Wikileaks.  In it press release yesterday, Wikileaks accused Stratfor of being “a company that fronts as an intelligence publisher, but provides confidential intelligence services to large corporations, such as Bhopal’s Dow Chemical Co., Lockheed Martin, Northrop Grumman, Raytheon and government agencies…”  Is this news?  Stratfor’s website has made no secret of its services for years.

Founded in 1996, Stratfor (formerly Strategic Forecasting, Inc.) is an independent intelligence shop focused on analyzing international affairs, public policy, and security issues for corporations, government agencies and investors. The firm’s analysis includes a daily sweep of open information sources supplemented by a network of intelligence sources. As of last year, the company has about 60 staff in Austin, 30 in Washington and 100 around the world.

Many of the emails posted by Wikileaks are banal.  In one exchange, an employee is complaining that someone accidentally ate the lunch he had put in the pantry refrigerator.

Wikileaks called attention to an email exchange in which the CEO of Stratfor, George Friedman, exhorts an analyst to take control of sources: “Control means financial, sexual or psychological control…” An analyst had reported on the health of Venezuela’s Hugo Chavez, but Friedman discounted the credibility of the information without an understanding of where and from whom the source had obtained the information.

It appears that most of Stratfor’s sources either volunteer information or are paid.  In its press release, Wikileaks characterized payments to sources as ‘bribes’: “Stratfor has realised that its routine use of secret cash bribes to get information from insiders is risky. In August 2011, Stratfor CEO George Friedman confidentially told his employees: ‘We are retaining a law firm to create a policy for Stratfor on the Foreign Corrupt Practices Act. I don’t plan to do the perp walk and I don’t want anyone here doing it either.’”

Under the Foreign Corrupt Practices Act and anti-bribery statutes in the UK and elsewhere, giving anything of value to foreign government employees could trigger enforcement actions, even though it is not clear that payments for information are strictly viewed as bribes.  Stratfor is not alone among research firms in trying to develop compliance policies to safeguard against anti-bribery statutes.

Finally, Wikileaks highlighted Stratfor’s effort to create an asset management subsidiary headed by a former Goldman Sachs employee.  The subsidiary, named ‘StratCap’ in internal emails, appears to be an internal macro hedge fund which would utilize Stratfor’s research for trade ideas.  The subsidiary has not launched yet, although it apparently has been doing some trading as a proof of concept.  Many respected research firms have asset management affiliates, which do not cause issues so long as there are proper controls in place.

Stratfor has been making all its research publicly available on its website since it was hacked in December.  Readers can go to www.stratfor.com and decide for themselves if there is anything nefarious about Stratfor’s research.  What they will see is straightforward commentary on geopolitical events.

Based on the information released by Wikileaks so far, there is no clear reason for singling out Stratfor for public humiliation.  One motivation is alluded to in the press release: Stratfor was monitoring Wikileaks.  According to the press release, there are 4,000 emails (out of 5 million) which mention Wikileaks or its founder Julian Assange.  These emails have not been released, so it is not clear what motivated Stratfor’s coverage other than interest in the Wikileaks content.  It would be ironic if Wikileaks is publicly crucifying one of its biggest fans.  Based on the emails so far, Wikileak’s decision to publicize Stratfor’s internal emails seems capricious and unwarranted.

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