[fc-discuss] Financial Cryptography Update: Two Hot Whistleblowers

[iang@iang.org]

((((((((( Financial Cryptography Update: Two Hot Whistleblowers )))))))))

                             June 01, 2005


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https://www.financialcryptography.com/mt/archives/000489.html



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The concept of whistleblowing informs our deepest designs.  We cannot
secure everything, so we go to the next best thing:  we document
everything.  Extraordinarily, we can put together extremely strong
systems that use the humble message digest to create chains of
signatures and time entanglement, not because this is perfect, but
because we know that if someone is looking, they can find.

As our deepest difficulties lie not in external security but in
protecting against the insider, audit trails and wide dissemination of
information is one of our hottest tools.  For the financial
cryptographer, our hope is to leave a trail so well buried and
indicative that any investigator is supported with some real evidence
and doesn't need to rely on anything but the evidence.

That's an ideal, thought, and it doesn't normally happen quite so well.
 Sometimes spectacularly so.  Here are two whistleblowing stories from
the US that provide colourful background to our efforts to secure
systems and processes.

In what has turned into a festival of hand-wringing moralising, Deep
Throat has revealed himself to be Mark Felt, the Deputy Director of the
FBI during the Watergate Affair.  Deep Throat was the fabled secret
source who prodded the journalists and provided the crucial inside tips
to keep the story alive until it swept over and destroyed the corrupt
and arrogant administration of Richard Nixon.

How could he, writes many of Washington's finest.  The act of
treachery, the traitor!

How could he not?  I ask.  When your administration is corrupt, what do
you do?  What is the press for?  What is that much exported model of
freedom there for if not to dig out the dirt and keep politicians
honest?  And is Mark Felt an employee of a corrupt administration first
and always?  Or is he human being, a member of a society?  (Americans
would ask if he was an American, but that always confuses me.)

I think it is pretty clear that all our institutions, and also our
models of financial cryptography support the concept and presence of
whistle blowers.  It may be hell when he's not on your team, but that's
a different issue.

And in story #2, the Arthur Anderson conviction was overturned in the
US Supreme Court by a unanimous decision.  Arthur Anderson went down
with Enron, which was done in by a public whistleblower when other,
inside whistleblowers failed to do it.

What can done say about the Supreme Court's ruling - one of the most
reputable names in accounting was wiped out by the original decision
and now we are told it was wrong?

http://news.moneycentral.msn.com/provider/providerarticle.asp?feed=FT&D
ate=20050531&ID=4854910

The obvious - too late for the 28,000 workers - has been written about
elsewhere, but I can't help thinking such is simply the wrong way to
look at the judicial process.  Did it do the right thing or the wrong
thing?	I can't see the wrong thing having been done here.  The
prosecutor had a good case, and won the conviction.  But he overstepped
the mark and now it has been overturned.  What else is there to say?

That's the way the process works, it's called checks and balances.  If
those that think this dreadful mistake means we should scrap the
prosecutorial process, or "reel in the prosecution" then they need to
think up a process to replace it.  Regardless of the 27,000 or however
many innocent workers at Arthur Anderson, that company was selling its
soul.

So we need a process to stop that, and the current process just happens
to do that.  Sometimes.  If anything, I think we need another big N
accounting firm to go down for just such another scandal, as we know
they were *all* doing it (as I've oft reported, I know all but one were
doing it, and I just never heard what the other one was doing...).

Literally, yes, if the system needs to work that way, we need another
27,000 innocents to be turned onto the streets in order to get the
message to the 1000 or so bad apples who will lie and cheat and
basically sell their company's reputation for 30 pieces of silver. 
Remember, there are thousands of shareholders and the millions of
california tax payers who also lost big time, and nobody's bemoaning
their fate much.  And nobody owns a job, whether they work for a
corrupt company or an honest one.

But I'm all ears to a better system.  Many older and legacy systems
think they can protect themselves with an audit, and for the sake of
all those who think that, well, their only real defence is an
occasional spectacular bust of those selling unreliable audits.  Or, to
get serious about auditing and learn about financial cryptography :-)

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