Pentagon Says Figure at Heart of Controversial 'Terror Market' Plan to Resign
Stephen J. Hedges.  Aug 1, 2003. pg. 1
Chicago Tribune


Aug. 1--WASHINGTON--Defense officials said Thursday that retired Admiral 
John Poindexter, a central figure in the Reagan administration's Iran-Contra 
scandal, will resign his current job at a Pentagon research agency after a 
controversy erupted over its plan to set up a futures trading market 
designed to help predict possible terrorist attacks.

Pentagon officials said Poindexter, who worked in the Defense Advanced 
Research Projects Agency (DARPA), would resign within the next several 
weeks. The announcement came two days after the Pentagon abruptly cancelled 
a nearly completed effort to establish what it called the "Policy Analysis 
Market."

Under the plan, investors would buy and sell futures based on the likelihood 
of political changes or events in the Middle East. The hope was to attract 
knowledgeable investors whose speculation on possible terrorist attacks 
would tip off U.S. authorities to actual plots.

"Futures markets have proven themselves good at predicting such things as 
election results: they are often better than expert opinions," DARPA argued 
in a press release announcing the cancellation of the futures market idea. 
The agency had planned to begin signing up investors on Friday.

But the scheme drew a chorus of objections from Capital Hill when lawmakers 
learned of it earlier this week. Several lawmakers said the idea was 
inappropriate, or just downright loopy. Senate Armed Services Committee 
Chairman John Warner (R-Va.) labeled the program, "a rather egregious error 
of judgment."

Poindexter, who is director of DARPA's Information Awareness Office, 
attracted attention last year when he proposed a computer program that would 
mine databases to gather information on individuals, all in the name of 
tracking terrorists. After concerns were raised about the government 
collecting information on innocent citizens, Congress and the Pentagon 
restricted the initiative, which was initially called the Total Information 
Awareness program.

Two of the most outspoken critics of the futures market idea-- Democratic 
Senators Ron Wyden of Oregon and Byron Dorgan of North Dakota--said in a 
joint statement that Poindexter's departure would not end concerns over the 
Information Awareness Office.

"Even with today's announcement," the senators said, "the proposed TIA 
program would still be the biggest spying and surveillance overreach in 
America's history, and it should be shut down. Congress will have the 
opportunity to do just that in the conference for the defense appropriations 
bill in the fall and we hope to see this program de-funded once and for all."

Warner said that Poindexter's resignation over the futures project does not 
dim his support for DARPA.

"Although this was a serious mistake by DARPA, I believe that the agency has 
played a tremendously important function in our overall defense structure 
for decades, and DARPA must continue to serve in the interest of our 
national security."

Testifying in the Senate earlier this week, Deputy Defense Secretary Paul 
Wolfowitz said he first read about the futures market plan in a newspaper 
report.

"I share your shock at this kind of program," Wolfowitz said. "We'll find 
out about it, but it is being terminated."

The Policy Analysis Market fell under a larger DARPA program called "Futures 
Markets Applied to Prediction," or FutureMAP. The Pentagon had planned to 
spend $8 million to administer the market through 2005. Wyden and others, 
however, suggested that it would have been difficult to control who was 
involved in the market, and that terrorist themselves could have 
participated, providing false information or earning money on planned events.

For Poindexter, resignation of his DARPA job is a second ignominious 
departure from an influential government post. As national security adviser 
to President Ronald Reagan during the 1980s, he became embroiled the 
Iran-Contra scandal, in which profits from arms sold to Iran were funneled 
to contra rebels who opposed the Nicaraguan government. Congress has 
specifically outlawed U.S. aid to the contras.

Poindexter testified that he shielded Reagan from knowledge of the arms and 
funds transfers. In 1990, he was convicted on conspiracy, obstruction of 
Congress and giving false statements, and became the highest-ranking 
official in the administration to be found guilty in the scandal. In 
sentencing Poindexter to six months in prison, a federal judge called him 
the "decision-making head" of the arms scheme.

Poindexter's conviction was later overturned when a court ruled that his 
congressional testimony, given under a grant of immunity, was used 
improperly during his trial. He returned to service as a Pentagon civilian 
at DARPA after the Sept. 11 terrorist attacks, when he pitched the idea of 
his database-mining plan.

DARPA is the Pentagon's internal research and development agency, and it has 
a reputation for pursuing groundbreaking and, at times, seemingly outlandish 
ideas, all in the name of improving the capabilities of the American military.

To military experts who are long familiar with DARPA's projects, and its 
willingness to try new ideas, the notion of a futures market as a way of 
gathering intelligence isn't so surprising.

"This isn't part of DARPA's traditional mission, but if it weren't done 
through DARPA, where else could it be done?" asked Loren Thompson of the 
Lexington Institute, a national security think tank. "What distinguishes 
DARPA from every other defense agency is its willingness to think way out of 
the box, to come up with zany ideas and then pursue them."

Research from DARPA, for instance, led to the development of unmanned aerial 
drones that proved beneficial to U.S. forces during recent conflicts in 
Afghanistan and Iraq. The agency offered no comment on Poindexter's 
resignation Thursday.

Credit: Chicago Tribune