(BN) CIA Said to Pay AT&T for Customer Data in Terrorist Hunt

(Bloomberg ) The Central Intelligence Agency has negotiated contracts with AT&T (T) Inc. and other U.S. companies to mine their databases for records of communications, including financial transactions, of suspected terrorists overseas.

The agreement with AT&T, the largest U.S phone company, costs the CIA more than $10 million a year, said a former U.S. official who worked in the effort to track down terrorist suspects, drug cartels, fugitives and other targets of interest by searching through overseas communications.

It mirrors similar arrangements with other intelligence and law enforcement agencies, including the FBI, the National Security Agency, the Drug Enforcement Agency and the Department of Homeland Security, the former official said, asking not to be named discussing classified information.

"Like all telecom providers, we routinely charge governments for producing the information provided," Mark Siegel, a spokesman for Dallas-based AT&T, said in an e-mail. "We do not comment on questions concerning national security.

''In all cases, whenever any governmental entity anywhere seeks information from us, we ensure that the request and our response are completely lawful and proper,'' Siegel said.

The disclosure of AT&T's payments from the CIA, reported by the New York Times, broadens public knowledge of the degree to which telecommunications carriers provide data about their customers to government intelligence and law enforcement officials.

Snowden Scandal

A spying scandal sparked by secret documents from former NSA contractor Edward Snowden began in June with disclosure in the Guardian newspaper of a secret court order directing the collection of call data from New York-based Verizon Communications Inc. (VZ)

''We don't comment on matters of national security," Bob Varettoni, a Verizon spokesman, said in a phone interview.

In a letter last year responding to a congressional request for information, AT&T said it had more than 100 full-time employees "specifically devoted to receiving, reviewing and responding to law enforcement requests" for call information. The company provided a price list showing that it charged $325 to activate a wiretap and $5 a day to keep it active.

Not all companies are paid for providing data to the CIA and, unless a subpoena has been issued, domestic telephone numbers, e-mail addresses and personal websites are blocked under the CIA's agreements, the former official said. The CIA generally is prohibited from domestic spying in the U.S., where the FBI has primary responsibility for intelligence gathering.

Acquiring Intelligence

"As a matter of longstanding policy, the CIA does not comment on alleged intelligence sources or methods," Dean Boyd, an agency spokesman, said in an e-mailed statement. "The CIA protects the nation and upholds the privacy rights of Americans by ensuring that its intelligence collection activities are focused on acquiring foreign intelligence and counterintelligence in accordance with U.S. laws."

In its May 2012 letter to then-Representative Edward Markey, AT&T said it had collected more than $24 million from government agencies for information from 2007 through 2011. Markey, a Massachusetts Democrat, is now in the U.S. Senate.

A Justice Department audit in 2008 found that telephone companies had sometimes disconnected FBI eavesdropping operations because the government failed to pay bills on time. The department's inspector general found that more than half of the FBI surveillance payments examined were late, and that a single field office owed one unnamed telephone company $66,000 in unpaid bills.

No Profit

"I'm sure the money AT&T received was more of a reimbursement for the work they did -- this isn't a profit center," said Roger Entner, an industry strategist with Recon Analytics LLC, based in Dedham, Massachusetts.

"What's their alternative?" Entner asked in a phone interview. "Lives could be lost if AT&T doesn't cooperate with the government. That's not a headline anyone would want to see."

The U.K.'s Government Communications Headquarters, known as GCHQ, the counterpart to America's NSA, has arrangements with telecom companies similar to the CIA's, as do intelligence agencies in many other democratic countries, the former official said.

Nations such as China, Iran, Syria and Russia have no restrictions on what domestic and international communications their spies can intercept, monitor and collect, the former official said.