Daily Archives: March 17, 2009

Civil liberties groups oppose gov’t mobile-phone tracking

IDG News Service | Mar 17, 2009

By Grant Gross

Three civil liberties groups have asked a U.S. appeals court to strike down a U.S. government request to obtain stored mobile-phone location tracking information without showing probable cause.

The Electronic Frontier Foundation (EFF), the Center for Democracy and Technology (CDT) and the American Civil Liberties Union (ACLU) have filed a brief asking the U.S. 3rd Circuit Court of Appeals to reject the U.S. Department of Justice’s request that courts give permission for it to obtain historical mobile-phone tracking information without a court-ordered warrant showing probable cause.

Several courts have ruled against the government obtaining real-time mobile-phone tracking information without a warrant, but this is the first case dealing with stored tracking information, said Jennifer Granick, EFF’s civil liberties director.

“The government argues that federal law requires judges to approve their applications for location information from cell phone companies — even if the police don’t have probable cause to obtain this sensitive information,” Granick said. “Courts have the right under statute — and the duty under the Constitution — to demand that the government obtain a search warrant before seizing this private location data.”

Mobile phone providers store data about where customers make and receive calls, based on the cell towers the customers’ phones used. Granick called the U.S. government’s attempts to collect past mobile-phone tracking information “creepy.”

“They can go back in the past for as long as the cell phone companies keep records,” she said.

The DOJ appealed the February 2008 opinion of Magistrate Judge Lisa Pupo Lenihan of the U.S. District Court for the Western District of Pennsylvania. A five-judge panel in the district court affirmed Lenihan’s decision in September, and the case is now before the 3rd Circuit.

A DOJ spokeswoman didn’t immediately comment on the Pennsylvania case and on the agency’s need for warrantless mobile-phone records.

The DOJ had asked the Pennsylvania court for a so-called D Order to obtain stored mobile phone records. Under a D Order, the government would have to show reasonable grounds that the mobile phone records were relevant to an ongoing investigation, instead of the more difficult standard of showing probably cause that a crime had been committed. The DOJ had argued that the Stored Communications Act required Lenihan to issue a D Order.
The three groups’ brief, filed Monday, said mandatory D Orders would “run headlong into serious constitutional questions affecting the rights of very cell phone user.”

The DOJ argued that mobile phone users voluntarily convey their location information to their carriers, therefore negating the need for a warrant, but the civil liberties groups disagreed. Mobile phone location tracking data “reveals information about the interior of spaces in which cell phone users possess a reasonable expectation of privacy,” the groups said.

‘Flaw’ in vote-tallying software silently deletes votes

Nearly 200 votes deleted in Calif. precinct using Premier Election Solutions system in 2008 general election

GCN | Mar 12, 2009

By William Jackson

A flaw in software used to tally mail-in ballots resulted in the loss of 197 votes in one California precinct during last year’s general election, according to Secretary of State Debra Bowen.

The flaw was found in a version of software from Premier Election Solutions Inc. (formerly Diebold) of Allen, Texas, used to count mail-in ballots that had been optically scanned. The problem was found in Global Election Management System (GEMS) version 1.18.19, and only affects precincts using the system’s Central Count server.


Diebold Admits Audit Logs in ALL Versions of Their Software Fail to Record Ballot Deletions

The software was corrected in later versions, but users of the affected software were not fully informed of the problem even though the company knew of it in 2004, Bowen said in a report filed with the U.S. Election Assistance Commission (EAC).

“The software error silently deletes all tallied votes from the first batch or ‘deck’ of optical scan paper ballots after they have been scanned into GEMS,” Bowen wrote. “The deletion results whenever…at any point after the first deck of voted ballots (automatically named “Deck 0” in GEMS 1.18.19) is scanned into the GEMS database, the Central Count Server window is closed and reopened; and the GEMS operator deletes any subsequent deck of ballots because a problem is encountered.”

Premier pointed out that only three counties in the country — Humboldt, Santa Barbara and San Louis Obispo, all in California — use the combination of this specific version of GEMS and the Central Count server. The company also said it notified customers of the problem and provided a workaround procedure to mitigate the problem.

Additional problems also were discovered in the audit logs of the software that failed to record some events and allowed some records to be removed from the system.

The report will be released March 17 at a public hearing in Sacramento, Calif.

The error was discovered after a volunteer watchdog group digitally scanned ballots cast in the Humboldt County precinct to enable an independent tally of votes. The unofficial tally, which was conducted with the cooperation of county election officials, came up with a total of 216 more votes than the official one. The bulk of these were tracked to a 197-vote discrepancy in the counting of mail-in ballots that had been optically scanned and counted with the GEMS software.

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A.I.G. planning huge bonuses after $170 billion bailout

IHT | Mar 15, 2009

By Edmund L. Andrews and Peter Baker

WASHINGTON: The American International Group, which has received more than $170 billion in taxpayer bailout money from the Treasury and Federal Reserve, plans to pay about $165 million in bonuses by Sunday to executives in the same business unit that brought the company to the brink of collapse last year.

Word of the bonuses last week stirred such deep consternation inside the Obama administration that Treasury Secretary Timothy Geithner told the firm they were unacceptable and demanded they be renegotiated, a senior administration official said. But the bonuses will go forward because lawyers said the firm was contractually obligated to pay them.

The payments to AIG’s financial products unit are in addition to $121 million in previously scheduled bonuses for the company’s senior executives and 6,400 employees across the sprawling corporation. Geithner last week pressured AIG to cut the $9.6 million going to the top 50 executives in half and tie the rest to performance.

The payment of so much money at a company at the heart of the financial collapse that sent the broader economy into a tailspin almost certainly will fuel a popular backlash against the government’s efforts to prop up Wall Street. Past bonuses already have prompted President Barack Obama and Congress to impose tough rules on corporate executive compensation at firms bailed out with taxpayer money.

AIG, nearly 80 percent of which is now owned by the government, defended its bonuses, arguing that they were promised last year before the crisis and cannot be legally canceled. In a letter to Geithner, Edward Liddy, the government-appointed chairman of AIG, said at least some bonuses were needed to keep the most skilled executives.

“We cannot attract and retain the best and the brightest talent to lead and staff the AIG businesses — which are now being operated principally on behalf of American taxpayers — if employees believe their compensation is subject to continued and arbitrary adjustment by the U.S. Treasury,” he wrote Geithner on Saturday.

Still, Liddy seemed stung by his talk with Geithner, calling their conversation last Wednesday “a difficult one for me” and noting that he receives no bonus himself. “Needless to say, in the current circumstances,” Liddy wrote, “I do not like these arrangements and find it distasteful and difficult to recommend to you that we must proceed with them.”

An AIG spokeswoman said Saturday that the company had no comment beyond the letter. The bonuses were first reported by The Washington Post.

The senior government official, who was not authorized to speak on the record, said the administration was outraged. “It is unacceptable for Wall Street firms receiving government assistance to hand out million-dollar bonuses, while hard-working Americans bear the burden of this economic crisis,” the official said.

Of all the financial institutions that have been propped up by taxpayer dollars, none has received more money than AIG and none has infuriated lawmakers more with practices that policy makers have called reckless.

The bonuses will be paid to executives at AIG’s financial products division, the unit that wrote trillions of dollars’ worth of credit-default swaps that protected investors from defaults on bonds backed in many cases by subprime mortgages.

The bonus plan covers 400 employees, and the bonuses range from as little as $1,000 to as much as $6.5 million. Seven executives at the financial products unit were entitled to receive more than $3 million in bonuses.

Liddy, whom Federal Reserve and Treasury officials recruited after AIG faltered last September and received its first round of bailout money, said the bonuses and “retention pay” had been agreed to in early 2008 and were for the most part legally required.

The company told the Treasury that there were two categories of bonus payments, with the first to be given to senior executives. The administration official said Geithner had told AIG to revise them to protect taxpayer dollars and tie future payments to performance.

The second group of bonuses covers some 2008 retention payments from contracts entered into before government involvement in AIG Indeed, in his letter to Geithner, Liddy wrote that he had shown the details of the $450 million bonus pool to outside lawyers and been told that AIG had no choice but to follow through with the payment schedule.

The administration official said the Treasury Department did its own legal analysis and concluded that those contracts could not be broken. The official noted that even a provision recently pushed through Congress by Senator Christopher J. Dodd, a Connecticut Democrat, had an exemption for such bonus agreements already in place.

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Japanese catwalk robot unveiled


Cybernetic human HRP-4C. Photo: AFP / Yoshikazu Tsuno

Japanese researchers have invented a catwalk model robot that will soon strut her stuff at Tokyo fashion shows.

Telegraph | Mar 16, 2009

The female humanoid with slightly oversized eyes, a tiny nose and shoulder-length hair boasts 42 motion motors programmed to mimic the movements of flesh-and-blood fashion models.

“Hello everybody, I am cybernetic human HRP-4C,” said the futuristic fashionista, opening her media premiere at the National Institute of Advanced Industrial Science and Technology outside Tokyo.

The fashion-bot is 5ft 2 ins, the average height of young Japanese women, but weighs in at a waiflike 95 pounds (43 kilos) – including batteries.

Appearing before photographers and television crews, the seductive cyborg struck poses, flashed smiles and pouted sulkily according to commands transmitted wirelessly via bluetooth devices.

The performance fell short of flawless when she occasionally mixed up her facial expressions – a mistake the inventors put down to a case of the nerves as a hail of camera shutters confused her sound recognition sensors.

She has a slightly manga-inspired human face but a silver metallic body.

“If we had made the robot too similar to a real human, it would have been uncanny,” said one of the inventors, humanoid research leader Shuji Kajita. “We have deliberately leant toward an anime style.”

The institute said the robot “has been developed mainly for use in the entertainment industry” but is not for sale at the moment.

“We unveiled this to attract attention in society,” said Junji Ito, a senior official at the institute, who said he saw the HRP-4C as a stepping stone toward creating a humanoid industry.

“It’s important that people feel good about humanoids and want to work with them,” he said. “We shifted from a dry mechanical image to a very human image.”

The preview was a warm-up for the robot’s appearance at a Tokyo fashion show on March 23.

Like her real-life counterparts, HRP-4C commands a hefty price – the institute said developing and building her cost more than 200 million yen (£1.4 million).

Hirohisa Hirukawa, another researcher, said the institute hoped to commercialise the humanoid in future.

European banks among top beneficiaries of AIG taxpayer bailout

Reuters | Mar 16, 2009

By Lilla Zuill

Goldman Sachs and a parade of major European banks, including Deutsche Bank , France’s Societe Generale and the UK’s Barclays , were major beneficiaries of more than $90 billion (64 billion pounds) of money paid out by AIG in the first three-and-a-half months after its bailout by the U.S. government last September.

The disclosure by AIG on Sunday is likely to trigger further criticism of why Goldman, with its many government links, and the European banks were funnelled such huge sums of U.S. taxpayer money after making bad bets on various securities, as well as strengthening the case of those who believe the whole bailout was botched.

Already this weekend AIG has come under intense attack by politicians for bonus payments it made to executives and staff for last year’s performance despite its near-bankruptcy and rescue.

Through three separate types of transactions, Goldman received an aggregate $12.9 billion. Among European banks, SocGen was the biggest recipient at $11.9 billion, Deutsche got $11.8 billion and Barclays was paid $8.5 billion.

The payments include the provision of collateral to back up credit default swaps, a form of financial insurance that AIG was writing; the purchase of the collateralized debt obligations, a type of complex debt security that underlay that insurance; and payments to counterparties of a securities lending program.

The figures released by AIG show amounts it paid to counterparties between September 16, 2008 — the date of AIG’s federal rescue — until the end of last year.

The U.S. government, which is spending up to $180 billion on the AIG rescue, extended aid to the insurer after large losses from a financial product unit’s bets on toxic mortgage assets that triggered rating cuts and collateral demands that AIG could not meet.

The U.S. government got a nearly 80 percent stake in AIG in exchange for its bailout of the insurer.

Other European banks that received funds from AIG in the months after its bailout include Calyon, part of Credit Agricole , Barclays PLC, UBS , Rabobank , Royal Bank of Scotland , Societe Generale , BNP Paribas , Banco Santander , Danske , HSBC , and Dresdner Bank AG, now a unit of Commerzbank .

Apart from Goldman Sachs, U.S. banks that received payments from AIG included Merrill Lynch, Wachovia, JPMorgan Chase , Morgan Stanley , Bank of America and Citigroup .

In addition, AIG listed some of the U.S. states to receive $12.1 billion in payments under guaranteed investment agreements since its September bailout.

The information was disclosed days before AIG CEO Edward Liddy is scheduled to testify before Congress on the firm’s spending of taxpayer funds. Liddy was appointed by U.S. Treasury officials after the insurer’s U.S. government rescue.

Since the $85 billion federal rescue of AIG last September, the government has stepped up twice more, raising the total amount at its disposal to aid the insurer, if needed, to $180 billion.

AIG posted a record quarterly loss of $61.7 billion last week, and the government has said it may have to pour yet more cash into the ailing firm. Officials have said AIG is being kept on taxpayer-funded life support because its failure could trigger giant losses for counterparties across the U.S. and Europe.

A spokesperson for the U.S. Federal Reserve said: “The counterparties that received collateral payments from AIG received these payments pursuant to contracts — contracts that don’t differentiate domestic versus international companies.”