The Other Big Brother

The demonstration seemed harmless enough. Late on a June afternoon in 2004, a motley group of about 10 peace activists showed up outside the Houston headquarters of Halliburton, the giant military contractor once headed by Vice President Dick Cheney. They were there to protest the corporation's supposed "war profiteering." The demonstrators wore papier-mache masks and handed out free peanut-butter-and-jelly sandwiches to Halliburton employees as they left work. The idea, according to organizer Scott Parkin, was to call attention to allegations that the company was overcharging on a food contract for troops in Iraq. "It was tongue-in-street political theater," Parkin says.

But that's not how the Pentagon saw it. To U.S. Army analysts at the top-secret Counterintelligence Field Activity (CIFA), the peanut-butter protest was regarded as a potential threat to national security. Created three years ago by the Defense Department, CIFA's role is "force protection"—tracking threats and terrorist plots against military installations and personnel inside the United States. In May 2003, Paul Wolfowitz, then deputy Defense secretary, authorized a fact-gathering operation code-named TALON—short for Threat and Local Observation Notice—that would collect "raw information" about "suspicious incidents." The data would be fed to CIFA to help the Pentagon's "terrorism threat warning process," according to an internal Pentagon memo.

A Defense document shows that Army analysts wrote a report on the Halliburton protest and stored it in CIFA's database. It's not clear why the Pentagon considered the protest worthy of attention—although organizer Parkin had previously been arrested while demonstrating at ExxonMobil headquarters (the charges were dropped). But there are now questions about whether CIFA exceeded its authority and conducted unauthorized spying on innocent people and organizations. A Pentagon memo obtained by NEWSWEEK shows that the deputy Defense secretary now acknowledges that some TALON reports may have contained information on U.S. citizens and groups that never should have been retained. The number of reports with names of U.S. persons could be in the thousands, says a senior Pentagon official who asked not be named because of the sensitivity of the subject.

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