by Cora Currier,ProPublica.

Nearly six months ago, President Obama promised more transparency and tighter policies around targeted killings. In a speech, Obama vowed that the U.S. would only use force against a “continuing and imminent threat to the American people.” It would fire only when there was “near-certainty” civilians would not be killed or injured, and when capture was not feasible.

The number of drone strikes has dropped this year, but they’ve continued to make headlines. On Friday, a U.S. drone killed the head of the Pakistani Taliban. A few days earlier came the first drone strike in Somalia in nearly two years. How much has changed since the president’s speech?

We don’t know the U.S. count of civilian deaths

The administration says that it has a count of civilian deaths, and that there is a “wide gap” between U.S. and independent figures. But the administration won’t release its own figures.

Outside estimates of total civilian deaths since 2002 range from just over 200 to more than 1,000.  The Pakistani government has given three different numbers: 400, 147, and 67.

McClatchy and the Washington Post obtained intelligence documents showing that for long stretches of time, the CIA estimated few or no civilian deaths. The documents also confirmed the use of signature strikes, in which the U.S. targets people without knowing their identity. The CIA categorized many of those killed as simply “other militants” or “foreign fighters.” The Post wrote that the agency sometimes designated “militants” with what seemed like circumstantial or vague evidence, such as “men who were ‘probably’ involved in cross-border attacks” in Afghanistan.

The administration reportedly curtailed signature strikes this year, though the new guidelines don’t necessarily preclude them. A White House factsheet released around Obama’s speech said that “it is not the case that all military-aged males in the vicinity of a target are deemed to be combatants.” It did not say that people must be identified. (In any case, the U.S. has not officially acknowledged the policy of signature strikes.)

Attorney General Eric Holder confirmed only that four Americans have been killed by drone strikes since 2009: Anwar al Awlaki and his 16-year-old son, Abdulrahman, Samir Khan, and Jude Kenan Mohammed. Holder said that only the elder Awlaki was “specifically targeted,” but did not explain how the others came to be killed.

Although Obama said that this disclosure was intended to “facilitate transparency and debate,” since then, the administration has not commented on specific allegations of civilian deaths.

We don’t know exactly who can be targeted

The list of groups that the military considers “associated forces” of al Qaeda is classified. The administration has declared that it targets members of al Qaeda in the Arabian Peninsula, and “elements“ of Al Shabaab, but there are still questions about how the U.S. determines that an individual belonging to those groups is in fact a “continuing and imminent threat.” (After the terror alarm that led to the closing of U.S. embassies this summer, officials told the New York Times they had “expanded the scope of people [they] could go after” in Yemen.)

This ties into the debate over civilian casualties: The government would seem to consider some people legitimate targets that others don’t.

Amnesty International and Human Rights Watch conducted in-depth studies of particular strikes in Pakistan and Yemen, respectively. They include eyewitness reports of civilian deaths. (Most of the deaths investigated happened before the Obama administration’s new policies were announced, although the administration has not said when those guidelines went into effect.) The reports also raised questions of the legality of specific strikes, questioning whether the deaths were all unavoidable casualties of legitimate attacks.

It does not appear that the U.S. plans to expand strikes against al Qaeda to other countries — officials have reportedly told Iraq, for example, it won’t send drones there. But the U.S. has established a surveillance drone base in Niger, and fed information from drones to French forces fighting in Mali.

We don’t know if the U.S. compensates civilian casualties

CIA director John Brennan suggested during his confirmation hearing that the U.S. made condolence payments to harmed families. But there is little evidence of it happening. U.S. Central Command told ProPublica that it had 33 pages related to condolence payments — but wouldn’t release any of them to us.

We don’t always know which strikes are American

While unnamed officials sometimes confirm that strikes came from U.S. drones, other attacks may be from Pakistani, Yemeni, or even Saudi planes.

(It’s also worth noting that the U.S. has also used cruise missiles and Special Forces raids. But the bulk of U.S. counterterrorism actions outside Afghanistan in recent years appear to rely on drones.)

We don’t know the precise legal rationale behind the strikes

Some members of Congress have seen the legal memos behind targeted killing of U.S. citizens. But lawmakers were not granted access to all memos on the program.

Other congressmembers have introduced bills with more reporting requirements for targeted killings. (Proposals for a “drone court” for oversight have not gotten very far.)

It’s far from clear that any of that additional oversight would lead to public disclosure.

The government and the American Civil Liberties Union and the New York Times are still locked in court battles over requests for drone documents. While a judge has ruled the CIA can no longer assert the “fiction” that it can’t reveal if it has any interest in drones, the agency hasn’t been compelled to release any information yet. The government has also so far fought off disclosure of legal memos underpinning targeted killings.

And here are some things we’ve learned through leaks and independent reporting:

How the U.S. tracks targets: Documents provided by Edward Snowden to the Washington Postdetailed the NSA’s “extensive involvement.” Lawyers in a terrorism-related case also uncovered reports that government surveillance of their client may have led to a drone strike in Somalia. The Atlanticpublished a detailed account of Yemen using a child to plant a tracking chip on a man who was killed in a U.S. strike.

What people in the countries affected think: The Pakistani government’s cooperation with at least some U.S. drone strikes — long an open secret — has now been well-documented. Public sentiment in the country is vividly anti-drone, even when violent Taliban commanders are killed, and politicians continue to denounce them as American interference. Limited polling in the region most affected by drones is contradictory, with some saying that at the very least, they prefer drones to the Pakistani military campaigns. Life in those areas is between a drone and a hard place: Residents told Amnesty International of the psychological toll from drones, and they also face reprisals from militants who accuse them of spying.

Yemen’s president continues to openly embrace U.S. strikes, though the public generally opposes them — particularly those strikes that hit lower-level fighters, or those whose affiliations with al Qaeda aren’t clear. Foreign Policyrecently detailed the aftermath of an August strike where two teenagers died. Their family disputes they had any link to terrorism.

The physical infrastructure: More of the network of drone bases across the world has been revealed — from the unmasking of a secret base in Saudi Arabia to the fact that drones had to be moved off the U.S. base in Djibouti, in the Horn of Africa, after crashes and fear of collision with passenger planes.

The CIA’s role: The administration had reportedly planned to scale back the CIA’s role in targeted killing, moving control of much of the drone program to the military. But the CIA reportedly still handles strikes in Pakistan and has a role in Yemen as well.

The history of the programs: Revelations continue to change our understanding of the contours of the drone war, but two books published this year offer comprehensive accounts — The Way of the Knife, by Mark Mazzetti of the New York Times, and Dirty Wars, by Jeremy Scahill.

Photo: Corporal Steve Follows RAF via Flickr

by Cora Currier,ProPublica, July 26, 2013.

In a major national security speech this spring, President Obama said again and again that the U.S. is at war with “al Qaeda, the Taliban, and their associated forces.”

So who exactly are those associated forces? It’s a secret.

At a hearing in May, Sen. Carl Levin (D-MI) asked the defense department to provide him with a current list of al Qaeda affiliates.

The Pentagon responded — but Levin’s office told ProPublica they aren’t allowed to share it. Kathleen Long, a spokeswoman for Levin, would say only that the department’s “answer included the information requested.”

A Pentagon spokesman told ProPublica that revealing such a list could cause “serious damage to national security.”

“Because elements that might be considered ‘associated forces’ can build credibility by being listed as such by the United States, we have classified the list,” said the spokesman, Lt. Col. Jim Gregory. “We cannot afford to inflate these organizations that rely on violent extremist ideology to strengthen their ranks.”

It’s not an abstract question: U.S. drone strikes and other actions frequently target “associated forces,” as has been the case with dozens of strikes against an al Qaeda offshoot in Yemen.

During the May hearing, Michael Sheehan, Assistant Secretary of Defense for Special Operations and Low-Intensity Conflict, said he was “not sure there is a list per se.” Describing terrorist groups as “murky” and “shifting,” he said, “it would be difficult for the Congress to get involved in trying to track the designation of which are the affiliate forces” of al Qaeda.

Sheehan said that by the Pentagon’s standard, “sympathy is not enough… it has to be an organized group and that group has to be in co-belligerent status with al Qaeda operating against the United States.”

The White House tied al Qaeda in the Arabian Peninsula and “elements” of Al Shabaab in Somalia to al Qaeda in a recent report to Congress on military actions. But the report also included a classified annex.

Jack Goldsmith, a professor at Harvard Law who served as a legal counsel during the Bush administration and has written on this question at length, told ProPublica that the Pentagon’s reasoning for keeping the affiliates secret seems weak. “If the organizations are ‘inflated’ enough to be targeted with military force, why cannot they be mentioned publicly?” Goldsmith said. He added that there is “a countervailing very important interest in the public knowing who the government is fighting against in its name.”

The law underpinning the U.S. war against al Qaeda is known as the Authorization for Use of Military Force, or AUMF, and it was passed one week after the 9/11 attacks. It doesn’t actually include the words “associated forces,” though courts and Congress have endorsed the phrase.

As we explained earlier this year, the emergence of new or more loosely aligned terrorist groups has legal scholars wondering how effectively the U.S. will be able to “shoehorn” them into the AUMF. During the May hearing, many lawmakers expressed concern about the Pentagon’s capacious reading of the law. Sen. John McCain (R-AZ) described it as a “carte blanche.”

Obama, in his May speech, said he looked forward “to engaging Congress and the American people in efforts to refine, and ultimately repeal, the AUMF’s mandate.” But he didn’t give a timeframe. On Wednesday, Rep. Adam Schiff (D-CA) introduced an amendment that would sunset the law at the end of 2014, to coincide with the U.S. withdrawal from Afghanistan. It was voted down the same day, 185 to 236.

The AUMF isn’t the only thing the government relies on to take military action. In speeches and interviews Obama administration officials also bring up the president’s constitutional power to defend the country, even without congressional authorization.

Photo via Wikimedia Commons

by Cora Currier,ProPublica

It’s been 11 years since the first detainees were brought to Guantánamo Bay. But the future of the prison, and the fate of the men inside it, is far from certain.  With 59 detainees at Gitmo currently on hunger strike, by the military’s count, here’s a primer on what’s going at the island prison.

What started the hunger strike?

It began after guards allegedly mishandled detainees’ Korans in a cell search in early February — but it’s certainly become about more than the holy books.

The military says detainees have previously hidden “improvised weapons, unauthorized food and medicine” in the spines of the Korans, and that the February searches were standard, conducted by Muslim translators. (Koran searches had set off hunger strikes before, in 2005.)

Attorneys for the hunger strikers say the detainees have offered to relinquish their Korans rather than have them searched. The military initially would not accept that option, but now says, “if they choose not to have one, they choose not to have one.”

In any case, just about everyone — from the International Committee of the Red Cross to the general in charge of U.S. Southern Command — agrees the strike comes out of growing frustration and hopelessness among detainees. As we detail below, there are few indications that Gitmo will be shuttered or detainees transferred in the near future. The last detainee to leave Gitmo, last fall, was dead.

General Kelly, of U.S. Southern Command, said last month that detainees had watched President Obama’s State of the Union address, and heard no mention of Guantánamo. “That has caused them to become frustrated and they want to … turn the heat up, get it back in the media,” Kelly said.

In an account published in The New York Times last weekend, a Yemeni hunger striker named Samir Moqbel said he hoped “that because of the pain we are suffering, the eyes of the world will once again look to Guantánamo before it is too late.” (Moqbel had recounted his story by phone to his lawyers.)

Another detainee, a Saudi Arabian named Shaker Aamer, also recently wrote an op-ed. Calling himself “a bit of a professional hunger striker,” Aamer said “this one is a whole lot different.” Lawyers say the strike is far more widespread than the military’s count.

According to the military, two detainees have attempted suicide since the strike began.

Have there been clashes between guards and the prisoners?

Yes, most recently last weekend. In an early-morning raid on Saturday, soldiers in riot gear moved about 60 of the detainees from their communal living camp into individual cells. Guards fired four “less-than-lethal” rounds; they say some prisoners wielded makeshift weapons, constructed from broken broomsticks and plastic water bottles filled with rocks.

Military commanders told the Miami Herald that the once-“compliant” detainees had been ignoring orders for months, “covering cameras, poking guards with sticks through fences, spraying U.S. forces with urine and refusing to lock themselves inside their cells for nightly sweeps.”

In January, there was an altercation on the facility’s new soccer field, which ended with guards shooting “one non-lethal round” at a group of detainees.

In a statement earlier this week, the military said the detainees were being placed on lockdown to allow for “round-the-clock monitoring.” In recent years, the communal living arrangement had been redone to “feel more like a dorm.” Now, the Miami Heraldreports, those men are confined to their cells, without TV, legal documents, and the other things they were previously allowed.

In turn, detainees’ lawyers have said that prison guards became stricter in recent months, and that mail and personal items have been confiscated in cell searches.

An attorney with the Center for Constitutional Rights, Omar Farah, told ProPublica that he and other lawyers feared that the move to individual cells would cut off information about the strike. “The primary way we’ve been getting information is through prisoners’ accounts of one another.”

Are the strikers being mistreated?

At least one detainee has alleged that the hunger strikers are being punished, by being forced to drink potentially unsafe tap water and cold temperatures in their cells. The military disputes that, saying the tap water is safe and bottled water is available. On Monday, a federal judge ruled he did not have jurisdiction to weigh in on the prisoners’ treatment.

What about force-feeding?

As of Wednesday, 15 detainees are being force-fed nutritional supplements through tubes inserted into their noses. The military says strikers “present” themselves for the procedure, though it also says passing out counts as consent.

Others have been tied down for feedings. Moqbel, in his account in The New York Times, said he was once tied to a bed for 26 hours last month. Now, he wrote, “Two times a day they tie me to a chair in my cell. My arms, legs and head are strapped down. I never know when they will come.”

The Red Cross and other groups oppose force-feeding; they say prisoners have a right to choose whether they eat. The U.S. military position is that it would be inhumane to let prisoners starve. A spokesman told the Miami Herald allowing a detainee to harm himself “is anathema to our values as Americans.”

How many prisoners are left at Gitmo?

There are 166. Since 2002, a total of 779 people have been held there.

No one has been brought to Gitmo under President Obama. The last people to leave were two Uighur Muslims from China, who were resettled in El Salvador last spring. Adnan Latif, a Yemeni, died in an apparent suicide in September. He was the ninth detainee to die.

Does the U.S. consider the detainees still there all dangerous terrorists?

No. In fact, about half the detainees have been approved for release. Here’s the government’s categorization of people held at Gitmo, as of last November:

—56 have been cleared for transfer to their own or a third country. Last fall, the State Department made 55 of those names public.
—30 Yemenis have been cleared to be sent back to Yemen, but are being held because of an unstable security situation there.
—24 people have “possible prosecution pending.”
—46 are being held in indefinite detention under the 2001 authorization for military force: they’ve been deemed too dangerous to release, but are not facing prosecution.
—Seven are facing trial by military commissions. That includes Khalid Sheikh Mohammed and four others accused of plotting the 9/11 attacks.
—Three were convicted in military commissions and are serving out their sentences or fulfilling plea bargains. (Four others were also convicted but transferred to their home countries.)

The U.S. won’t release the names of those it considers hunger strikers, and it’s not always clear which category detainees fall into. Some of those who have spoken through their lawyers are on the cleared-for-transfer list (Moqbel, of the New York Timesop-ed, is not, though he claims he is among the group of Yemenis who may be transferred.)

Carol Rosenberg of the Miami Heraldsays she has been told that the 9/11 defendants and the rest of the 16 “high-value” detainees, who were brought to Gitmo from the CIA’s black-site prisons, are not participating in the hunger strike. They are held in a separate, secret section of the camp. (See the Herald’s “prison-camp primer” for descriptions of where the detainees are held.)

Why haven’t the people cleared for transfer been released?

Over the past few years Congress effectively prohibited bringing detainees to the U.S. and made it difficult to send them to other countries, by requiring an assurance that the individual would never pose a threat to the U.S. in the future.

Difficult, but not impossible — there are waivers in the legislation that allow the president to get around the restrictions in certain cases. Human rights groups are pushing the administration to use those waivers, but Obama has yet to do so. Four detainees have been sent abroad since the law on overseas transfers went into effect, but in each case, it was to fulfill a court-ordered release or a military commission plea agreement, which Congress allowed. (The Supreme Court has ruled the men at Gitmo have the right to challenge their detention in federal court.)

As for the Yemenis still at Gitmo, Obama announced a moratorium on transfers to Yemen after the attempted Christmas Day bombing of 2009. There are also fears about recidivism — a report this year from the Director of National Intelligence estimates that 16 percent of released detainees have “reengaged” in militant activities. (Most of them were released under President George W. Bush.)

Other countries have also called for the release of their citizens. The president of Yemen, which has worked closely with the U.S. on drones and counterterrorism, recently referred to Gitmo as “clear-cut tyranny.”  Britain has also reportedly lobbied for the release of one of the hunger strikers, Shaker Aamer, who has British residency. The UN commissioner for human rights has said that “indefinite incarceration” at Gitmo “is in clear breach of international law.”

Why hasn’t Obama closed Gitmo?

The White House says he “remains committed” to closing Gitmo, but those plans have stalled in the face of congressional opposition.

One of Obama’s first acts in office was an executive order to shut down the prison within a year. He didn’t rule out continued military detention or trial in military commissions, but temporarily suspended the commissions and required a review of the status of the Gitmo detainees.

In a speech a few months later, Obama said that “the existence of Guantánamo likely created more terrorists around the world than it ever detained,” and had “set back the moral authority that is America’s strongest currency in the world.”

Since then, lawmakers have passed restrictions and the administration has dropped many of its visible efforts to shut down Gitmo.

This January, the State Department shut down the office responsible for detainee resettlement. Even if transfer restrictions were loosened, it’s not clear what would happen to the prisoners who are being held indefinitely. A new periodic review process for the detainees was created in 2011, though it still hasn’t actually begun. Military commissions started up again, with some changes — though still plenty of controversy, including questions about government censorship and surveillance.

What can outside observers see at Gitmo?

Not much beyond what the military wants them to see.

The competing claims about water quality, numbers of strikers, and the Koran searches underscore the limited, often one-sided, information that gets out. Detainees communicate mostly through their lawyers. The military controls access to the prison.  It recently stopped commercial flights to the base, a decision met with anger from attorneys and quickly reversed. For a few weeks recently, reporters were shut out of the prison.

A Reuters photographer recently recounted his tightly monitored visit, and what he was and wasn’t allowed to shoot (totally fine: signs saying “No Photos.” Not fine: detainees’ faces.) Carol Rosenberg, of the Miami Herald, also recently described the restrictions on reporting from Gitmo, which she’s been doing for 11 years. She’s never been allowed to speak to a detainee.

The Red Cross has access to prisoners and has been to Gitmo during the strike, though its findings are rarely made public. Last week, the group’s president called the legal situation of prisoners there “untenable.”

How much does Guantánamo cost?

A lot. A recent report from the Government Accountability Office said the prison costs, on average, $114 million per year, not including military personnel. A 2011 analysis put the annual cost per prisoner at $800,000 — as much as 30 times what it costs to keep someone in federal prison.

The Pentagon has proposed a $150 million overhaul of the facility this year.

JTF Guantanamo photo by U.S. Air Force Senior Airman Gino Reyes

by Cora Currier,ProPublica.

Federal prosecutors in Brooklyn unsealed an indictment last week charging Ibrahim Suleiman Adnan Adam Harun with six terrorism-related counts.

The announcement that Harun is in U.S. custody in New York may also shed light on a small part one of the most secretive aspects of U.S. counterterrorism operations during the Bush administration: What became of terror suspects held by the CIA in its network of “black-site” prisons around the world? Or disappeared into foreign cells in extraordinary renditions?

With their indictment of Harun, prosecutors offered a basic account of how the 43-year-old Nigerian — described as “a prototype al Qaeda operative” — spent the last decade. He fought U.S. forces in Afghanistan, prosecutors said, before leaving for Africa, where he allegedly conspired to bomb U.S. diplomatic facilities. Harun, also known by his alias Spin Ghul, eventually wound up in Libyan prison for six years before he was released amid the turmoil of the uprising against Muammar Qaddafi.

Did the U.S. know that he was in Libya, and did they play a role in his detention? Did the CIA work with the Libyans to then obtain information from him?

Testimony from an alleged former CIA detainee, a leaked document from the military prison at Guantanamo Bay, and evidence from cases of others rendered to Libya suggest that might be so.

A spokesman for the CIA said that the agency “does not, as a rule, comment on matters before the courts.” The U.S. Attorney’s office for the Eastern District of New York declined to provide information beyond what was announced with the indictment. A lawyer for Harun, David Stern, also declined to comment.

The CIA has steadfastly refused to comment on the fates of most former detainees, publicly accounting for only 16 people of the roughly 100 the agency has said it once held. The U.S. has successfully dismissed lawsuits over rendition and asserted that much about the CIA program is still classified.

President Obama, for his part, ordered the CIA black-site prisons closed when he took office. (He allowed renditions to continue, with pledges of greater oversight of the countries where suspects were sent.) But still, little about the program has been officially disclosed.

Human Rights Watch and other organizations, as a consequence, have been trying to piece together the details of the CIA’s detention and rendition programs for years. In 2009, ProPublica published a list of more than 30 people believed to have been held by the CIA whose whereabouts were still unknown—including a Spin Ghul.

Now and then, the fates of these detainees have emerged in the press or through rights groups, particularly since the upheaval caused by the Arab Spring.

Joanne Mariner, a senior researcher with Amnesty International who worked on identifying former detainees for Human Rights Watch, said that the information in the indictment of Harun lines up with what she knew about Spin Ghul. Operating in an arena of such secrecy, “when all this was going on, we’d get these little clues and bits of information. It’s really quite interesting to see confirmation that these people did exist,” she said.

Marwan Jabour, who alleges he was held in Afghanistan by the CIA (“Ghost Prisoner,”) told Human Rights Watch that he was shown photos of Harun (whom he called Ghul) during interrogations, and was led to believe he was in U.S. custody. Jabour had met Harun in Pakistan in 2003, and described him as an African who spoke Arabic. Jabour was held from 2004 to 2006, during which time, according to this week’s indictment, Harun was arrested in Libya.

A 2007 document from Guantanamo, released by Wikileaks, cites detailed information provided by Harun. For example: “Ghul also noted that Saudi authorities had detained Saudi al Qaeda members — Ghul remarked that these two individuals were al Qaeda members since approximately 1995.” In the document he is identified as both Harun and Ghul, and described as a “Nigerian [sic] national and al Qaeda operative.” The citations refer to CIA intelligence reports, but don’t specify where Harun was or when he provided the information.

Since Qaddafi’s fall, evidence has emerged of close communication between the CIA and Libyan officials during the Bush administration, despite the Qaddafi regime’s reputation for torture and brutal prison conditions. Documents found in the abandoned office of Libya’s former top intelligence official refer to the rendition of several people to Libya and the sharing of information. Other “missing prisoners” believed to have been held by the CIA turned up in Libyan prisons. Some of them have given detailed accounts of detention in U.S. custody before being sent there.

“The U.S. delegated a lot of its detention capacity to abusive governments like Libya — they were perfectly happy to have Libya holding these people,” says Mariner.

If the U.S. did know he was in Libya, it took authorities some time to catch up with him after he gained his freedom in June, 2011.

After his release, Harun told prosecutors, he was placed on a ship full of Libyan refugees bound for Italy, where he was arrested for assaulting officials onboard. Italian authorities agreed to extradite him to the U.S. last fall.

Harun is the latest in a recent string of terror suspects brought to federal court from overseas by the Obama administration — including Osama bin Laden’s son-in-law Abu Gaith, who pleaded not guilty in federal court in Manhattan to conspiring to kill Americans earlier this month.

Some congressional Republicans have insisted that such cases are better prosecuted in military commissions like the one at Guantanamo. Senator Saxby Chambliss (R-GA) said of Harun: “The administration has once again decided to forgo an extensive intelligence interrogation and instead bring an enemy combatant immediately into the federal court system.”

According to court documents, Harun was interviewed by U.S. officials last September in Italy, with his Italian counsel present. He waived his Miranda Rights before those sessions. The indictment against him remained sealed because the government believed “he may be in a position to provide information…relevant to the national security of the United States.”

Harun could face life in prison. Whether or not his trial reveals more about the CIA’s role, at the very least, he can be crossed off the list of the missing.

Photo: U.S. Air Force Senior Airman Gino Reyes

by Cora Currier, ProPublica.

In his second inaugural address, President Barack Obama declared that “a decade of war is now ending.” White House press secretary Jay Carney later said there was “no question” that the U.S. conflict with al Qaeda was “entering a new phase.”

That day in Yemen, a U.S. drone strike reportedly killed three suspected al Qaeda militants. It was one of several strikes there that week and followed a spate of them in Pakistan. Outgoing Secretary of Defense Leon Panetta said this weekend that drone strikes “ought to continue to be a tool we ought to use where necessary.”

Like the war in Afghanistan, these and hundreds of other drone strikes have occurred under the authority of a concise law passed one week after 9/11. It reads:

That the President is authorized to use all necessary and appropriate force against those nations, organizations, or persons he determines planned, authorized, committed, or aided the terrorist attacks that occurred on September 11, 2001, or harbored such organizations or persons, in order to prevent any future acts of international terrorism against the United States by such nations, organizations or persons.

That law — known as the 2001 Authorization for Use of Military Force, or AUMF — is now more than 11 years old. Will it cover this “new phase” of war?

Obama, like President George W. Bush before him, has claimed that the 2001 authorization is the domestic legal basis of the authority to kill and detain not only members of al Qaeda and the Taliban in Afghanistan but also their “associated forces.” Courts have largely agreed with that interpretation, and in 2011 Congress codified it in authorizing military detention.

A Justice Department memo — published Monday by NBC News — repeatedly cites Congress’ authorization in laying out the case for targeting a U.S. citizen “who is a senior operational leader of al Qaeda or an associated force.”

Officials note the AUMF does not have a geographic boundary. Individuals far from the “hot” battlefield in Afghanistan, officials have argued, can still be said to be engaged in an armed conflict with the U.S.

But legal scholars say the AUMF’s authority to detain and kill militants may be undermined if there is no “core” al Qaeda group to speak of, or when active conflict in Afghanistan ends.  It may also falter when it isn’t clear exactly how a group or individual is tied to al Qaeda — such as in the web of militant and extremist groups operating in Africa and elsewhere that may claim an affiliation or be ideologically aligned.

“There’s room for shoe-horning them into the AUMF,” says Robert Chesney, a professor at University of Texas School of Law. “But any honest assessment has to concede it’s not obvious that all the more loosely affiliated groups are encompassed.”

The AUMF doesn’t include an expiration date. But the law does have its limits, says Chesney. “It’s not claiming an armed conflict with all terrorism, but with al Qaeda and its associated forces. In theory, there can come an end.”

Last November, shortly before he stepped down as the Pentagon’s general counsel, Jeh Johnson gave a speech on that end. He spoke of a “tipping point,” when the U.S. counterterrorism efforts “should no longer be considered an ‘armed conflict’ against al Qaeda and its associated forces.” Counterterrorism efforts would then be aimed against individuals and could be handled primarily by law enforcement.

Johnson conceded it was hard to imagine that tipping point. There would be no “peace treaty” to mark it, he said, and he could “offer no prediction about when this conflict will end.”

A preview of the dilemma came in 2011, when the U.S. indicted a Somali man named Ahmed Abdulkadir Warsame in federal court in New York. Warsame was a member of Al-Shabaab, a group in Somalia, and had ties to al Qaeda in the Arabian Peninsula, but he was not connected to any plot against the U.S. He had initially been held by the military, but according to Newsweek reporter Daniel Klaidman, the Obama administration was unsure where he fit under the law.

Jack Goldsmith, a professor at Harvard Law School and former head of the Office of Legal Counsel for President Bush in 2003 and 2004, says “the AUMF is losing its efficacy. We’re in a place when we’re engaged in types of warfare that the nation hasn’t openly debated.”

The “shoehorn” approach may eventually run into a legal gray area. Chesney points out that court decisions upholding military detention have generally been linked in some way to the conflict in Afghanistan. (So far, U.S. courts have not taken up lawsuits challenging targeted killing.)

“When the war in Afghanistan ends, and if core al Qaeda is decimated, how do we define who we are at war with?” says Hina Shamsi, director of the National Security Project at the American Civil Liberties Union.

Shamsi argues that the Obama administration is already relying on an overbroad interpretation of the AUMF to justify strikes against alleged militants in Yemen or Somalia without demonstrating precisely how they are associated with al Qaeda or engaged in anti-U.S. hostilities.

Militant groups have emerged as a threat in North Africa — some claiming an affiliation with al Qaeda. The degree to which those groups are plotting against the U.S. or interested in regional control is still being debated. The U.S. is expanding its presence in the region, but at least initially, the government says it is bolstering surveillance and training and assistance for local governments, not taking military action.

A Pentagon spokesman said last week he was “unaware of any specific or credible information at this time that points to an [al Qaeda in the Islamic Maghreb] threat against the homeland, but, again, I’m not ruling it out.”

The U.S. has provided refueling and cargo planes to assist the French intervention in Mali. That is lawful because France is acting “in response to a request for assistance from the Malian government,” Tommy Vietor, a spokesman for the National Security Council, told ProPublica.

Administration officials say strikes against al Qaeda and associated forces are permitted under international law on the basis of self-defense, in addition to the authority the AUMF provides under domestic law. The U.N. has been investigating targeted killings and civilian casualties from drone strikes.

In a case where the 2001 AUMF did not apply, the administration could seek a new authorization from Congress or rely on presidential powers to use force against an imminent threat.

Gen. Carter Ham, the head of U.S. Africa Command, said in an interview with The Wall Street Journal in December that an authorization to address new threats in North Africa was a “worthy discussion.” But what form that would take is unclear. The Pentagon and White House did not comment to ProPublica on the possibility of a new AUMF.

Presidents have used force without congressional authorization by invoking presidential powers under Article II of the Constitution.

Obama ordered airstrikes over Libya in the spring of 2011 citing international cooperation and “national interest” as justification. (Several lawmakers subsequently sued the administration for bypassing them, but the case was dismissed.) He has also claimed authority to launch pre-emptive cyberattacks, the New York Timesreported this weekend. President Bill Clinton cited the nation’s right to self-defense when he bombed Afghanistan and Sudan in 1998 in retaliation for the bombing of U.S. embassies in East Africa.

Obama officials regularly cite self-defense alongside the AUMF in justifying targeted killing. White House counterterrorism advisor John Brennan has said that the U.S. uses “a flexible understanding of ‘imminence’ ” in determining what constitutes a threat. The Justice Department memo on targeting U.S. citizens also references a “broader concept of imminence,” which it holds “does not require the United States to have clear evidence that a specific attack on U.S. persons and interests will take place in the immediate future.”

Shamsi and other critics of the drone war have noted that some strikes in Yemen in particular appear to target insurgents acting against local government. The U.S. almost never acknowledges particular strikes or details the specific threat posed by an individual.

Johnson, the former Pentagon counsel, told The Wall Street Journal that “the president always has the Constitutional authority to protect the nation and important national interests by responding to individual terrorist threats, militarily or otherwise.”

Johnson noted that for a “sustained armed conflict, the preference should be congressional authorization.”

Photo credit: Corporal Steve Follows RAF

by Cora Currier, ProPublica.

On Tuesday, the Senate passed the National Defense Authorization Act, or NDAA, a yearly military spending bill.

Last year, the bill affirmed the U.S.’s authority to hold suspected terrorists indefinitely and without charges. The provision had generated plenty of controversy, particularly about whether U.S. citizens could be detained indefinitely.  This year, the Senate bill says that citizens can’t be detained in the U.S. — but concerns remain about the scope of detention powers.

We’ve taken a step back, run through the controversy, and laid out what’s new.

What does the law currently say about military detention?

Section 1021 of last year’s National Defense Authorization Act affirms the military’s ability under the law of war to detain people “without trial until the end of hostilities.”

It also says they can be tried at a military commission, transferred to another country or to “an alternative court” — leaving open the possibility of civilian trials.

Who can be detained?

Anyone who “planned, authorized, committed, or aided” the 9/11 attacks, or “harbored those responsible.” Also, anyone who has been “part of or substantially supported” al Qaeda, the Taliban, “or associated forces that are engaged in hostilities against the U.S. and its coalition partners.”

Does that include U.S. citizens?

Congress left that deliberately unspecified last year, essentially punting the issue to the courts.

The language in the bill didn’t outright permit or prohibit indefinite detention of U.S. citizens. The act stated that it wouldn’t affect “existing law or authorities relating to the detention of United States citizens, lawful resident aliens of the United States, or any other persons who are captured or arrested in the United States.”

But existing laws and authorities don’t actually give a definitive answer. There were cases involving U.S. citizens held by the military under President George W. Bush, but no precedents were established. The Supreme Court ruled only narrowly on the case of Yaser Hamdi, on the basis that he was captured on the battlefield in Afghanistan. (Hamdi was released and went to Saudi Arabia in 2004.) In a second case, Jose Padilla was transferred to a civilian court. (For more legal details, see these backgrounders from the blog Lawfare and the Congressional Research Service.)

In signing the bill last year, Obama said that his administration “will not authorize the indefinite military detention without trial of American citizens.” Critics were quick to point out that this was a non-binding policy, and that the law left the door open for future administrations to interpret it differently.

But this year’s bill fixed all this confusion, right?

Kind of.

In a replay of last year’s debate, a flurry of proposed amendments went around the Senate in an attempt to clarify the language about indefinite detention. Ultimately, the Senate passed an amendment from Senator Dianne Feinstein (D-CA) that seems to protect U.S. citizens:

“An authorization to use military force, a declaration of war, or any similar authority shall not authorize the detention without charge or trial of a citizen or lawful permanent resident of the United States apprehended in the United States, unless an Act of Congress expressly authorizes such detention.”

What about people detained in the U.S. who aren’t citizens or permanent residents?

They could still be indefinitely detained.

Human rights and civil libertarian groups criticized the amendment for falling short of the protections in the Constitution under the Fifth Amendment, which says that any “person” in the U.S. be afforded due process.

In the floor debate, Feinstein said she agreed with critics that allowing anybody in the U.S. to be detained indefinitely without charges “violates fundamental American rights.” Feinstein said she didn’t think she had the necessary votes to pass a due-process guarantee for all.

So does that settle it? Citizens can’t be detained?

Depends which senator you ask.

Some voted for Feinstein’s amendment even though they think the military should be able to indefinitely detain people within the U.S. They think her amendment still allows it, because of the last clause — “unless an Act of Congress expressly authorizes such a detention.”

As The Hillreported, senators Lindsey Graham (R-SC), John McCain (R-AZ), and Carl Levin (D-MI) all claim that Congress’ 2001 Authorization for Use of Military Forcedoes authorize the detention of citizens, even in the U.S. They cited the Hamdi case, despite the fact that he was captured abroad.

What about last year’s NDAA? Isn’t that an Act of Congress authorizing detention?

Not expressly. It gets back to that non-position that last year’s bill settled on — “Nothing in this section shall be construed to affect existing law or authorities” about the detention of U.S. citizens.

Does the NDAA go farther than the post-9/11 AUMF?

On the surface, yes, but many courts have already used AUMF to affirm broad presidential powers.

The AUMF doesn’t mention detention, or al Qaeda, the Taliban and associated forces, which the NDAA claims the U.S. has the authority to detain. It authorizes “necessary and appropriate force” against anyone involved with or harboring anyone involved with the 9/11 attacks.

But both Bush and Obama have maintained in court that the AUMF does authorize detention, and that its authorization applies to al Qaeda, the Taliban, and “associated forces.”

So the detention section of the NDAA largely echoes the authorities that Bush and Obama have previously asserted and gotten through the courts.

What the NDAA does do, as Lawfare phrased it, is “put Congress’s stamp of approval” on these claims, which could have implications for future litigation. The Congressional Research Service report goes into more detail on the way that courts have interpreted “associated forces” and “substantial support”—phrases the NDAA doesn’t attempt to define.

Isn’t there a lawsuit going on over the NDAA?

Yes. Last year, a coalition of journalists and activists sued to block the indefinite detention provision on Constitutional grounds. A U.S. District Court judge ruled in their favor in September, claiming that the government had overstepped in its interpretation of the AUMF. Her decision was stayed by an appeals court, who found it overly broad. The case is ongoing.

So what happens next?

The bill still has to be reconciled with the House version, which did not include an amendment to the detention provision like Feinstein’s.

Obama has threatened to veto the NDAA over other measures, including restrictions on transfers from Guantanamo prison. But he said the same thing last year, and ended up signing the bill into law.

JTF Guantanamo photo by U.S. Air Force Senior Airman Gino Reyes, accessed via Flickr.com

by Cora Currier, ProPublica

Florida has the highest percentage of home loans in foreclosure in the country. So why is more than $300 million that could help homeowners sitting unused?

Florida was awarded those millions in February as part of the $25 billion national settlement between five of country’s biggest banks and 49 states and the District of Columbia. The settlement resolved allegations of wrongful foreclosures and other mortgage servicing abuses, and required banks to offer some homeowners the opportunity to modify their loans or refinance, or, in some cases pay homeowners directly for wrongful foreclosure.

The banks also had to pay $2.5 billion directly to state governments. Florida’s sum was the largest, after California, in part a measure of how deeply the mortgage crisis affected the Sunshine State.

Yet Florida is one of just a few states where the attorney general has not announced plans for a significant portion of the money. We’ve contacted every state to find out what they were doing with that money. Of the $2.5 billion going to states, just over a billion dollars has been pledged for housing-related programs, while a roughly equal amount has been diverted to plug budget holes or fund programs unrelated to the foreclosure crisis. And $378 million is still to be determined, and almost all of that is Florida’s.

Florida’s funds are caught between the attorney general, Republican Pam Bondi, and the Republican state legislature. Bondi has pledged to make the money available to homeowners; earlier this year, she called for suggestions from the public. Some state lawmakers, however, insist that it needs to go through the regular appropriations process — where it could potentially be siphoned off into other programs. And that wouldn’t happen until March, when the legislative session begins.

“We were very happy about the attorney general’s commitment early on that the money be used within the spirit of the settlement,” said Jaimie Ross, president of the Florida Housing Coalition, an advocacy organization. “But is it just going to sit there until the legislature starts so that we can wait to see how they want to use it? The silence is deafening.”

A spokesman for the attorney general said, “it’s a matter of having a dialogue between the two sides.” He could not give a timeline for when a decision might be reached. The 2013 budget request Bondi submitted to the legislature last week made no mention of the settlement.

The mortgage settlement states that Florida’s money can be spent “as directed” by the Florida attorney general for “purposes consistent with” the settlement, such as programs aimed at homeowner protection or consumer fraud. But the legislature should still “play a role,” according to Katie Betta, a spokeswoman for incoming State Senate President Don Gaetz, a Republican.

The Democratic minority leader of the state senate, Nan Rich, said, “It’s unconscionable to be sitting on this money.” Eleven percent of Florida’s mortgaged homes are currently in foreclosure, and the state saw 92,000 completed foreclosures in the year ending August 2012, second only to California.

Both Rich and the Florida Housing Coalition’s Ross expressed concern that the legislature could divert the money away from housing. One Democratic representative has already suggested it be used to fund a pay raise for state employees.

It wouldn’t be the first state to see that happen. In May, we showed how almost $1 billion that states received for the settlement had gone to plug budget holes or fund programs unrelated to the housing crisis. California, for example, received $410 million, but it all went to the general fund. Ultimately, the attorney general’s office ended up with just $18.4 million earmarked for housing counseling and overseeing the settlement.

Arizona’s state assembly diverted $50 million—more than half the state’s total—to the general fund. Housing advocates challenged the transfer in court, but a judge ruled this month that it was legitimate. North Carolina legislators also ended up rerouting $7.8 million that had been intended for housing counseling to free up money in the state budget.

New Jersey put the $75 million it received towards various social programs, including affordable housing. But the money funded preexisting programs, rather than supplementing them or starting new initiatives, as part of an effort to balance the budget.

A spokesman for the state treasury told us earlier this year that the settlement did not require them to spend extra money. “If we put [the money] into the budget and don’t have to cut something else, that’s a net gain,” he said. (The treasury didn’t respond to our more recent requests for comment.)

Advocates and some lawmakers protested the decision not to boost spending for housing. They say it may follow the letter of the settlement, but not the spirit. According to CoreLogic, New Jersey had the second-highest percentage of mortgages in foreclosure, after Florida.

What other states are doing with the money

When we first mapped out where the settlement millions were going, many states hadn’t yet outlined plans. We’ve updated our comprehensive map to show developments since then. Here’s a sampling of what’s happened:

Attorneys general and lawmakers are still working out how the money will be used in a few other states besides Florida.

Some of the states that turned over their settlement money to their legislature haven’t yet seen it spent. The biggest case is Texas, where the legislature won’t meet until January to determine how to budget the $134 million it received.  There’s no requirement that any of that money be spent on housing.

Additional reporting by Paul Kiel.

by Cora Currier, ProPublica

For many years, Bush administration officials have said that the CIA waterboarded only three terror suspects. Despite nearly endless revelations and investigations about the U.S.’s treatment of detainees, there has never been evidence contradicting those claims. But that changed earlier this month.

Human Rights Watch recently released a report detailing the accounts of 14 Libyan men who claim they were detained and, in some cases, subject to harsh interrogations by the U.S. before being transferred back to Libyan prisons, where they also faced abuse.

One man, Mohammed Al-Shoreoiya, provided a detailed account of being waterboarded “many times” while in U.S. custody in an Afghan prison between 2003 and 2004. Another man described a similar form of water torture, conducted without a board.

None of the men’s accounts could be confirmed, but as the New York Times noted, the detainees did not seek out Human Rights Watch, and their descriptions of their treatment, including waterboarding, are consistent with CIA procedural documents that have been made public.

The CIA first confirmed waterboarding in February 2008, when then-CIA director Michael Hayden told a Senate committee that “only three detainees” had been waterboarded — Khalid Sheikh Mohammed, Abu Zabaydah, and Abd Al Rahim al-Nashiri. No one, he said, had been subjected to the process since 2003. That claim has been repeated by former President George W. Bush and top officials from his administration. Former Defense Secretary Donald Rumsfeld has also noted that the military did not waterboard.

A spokesman for the CIA told ProPublica that “the Agency has been on the record that there are three substantiated cases in which detainees were subjected to the waterboarding technique under the program.”

Here are top Bush administration officials stating, again and again, only three detainees were waterboarded [emphasis added]:

George W. Bush

Of the thousands of terrorists we captured in the years after 9/11, about a hundred were placed into the CIA program. About a third of those were questioned using enhanced techniques. Three were waterboarded.

– November 2010, in his memoir, Decision Points.

President Bush also repeated the line in interviews that fall with the Times of London and Fox News.

Dick Cheney, former vice president

It is a fact that only detainees of the highest intelligence value were ever subjected to enhanced interrogation. You’ve heard endlessly about waterboarding. It happened to three terrorists.

— May 21, 2009: Dick Cheney, in a speech at the American Enterprise Institute.

In 2009, Cheney made the same claim in another speech and in interviews with the Washington Times, CNN and CBS. In 2011, he mentioned it again in a speech at AEI.

Donald Rumsfeld, former defense secretary

[Michael Hayden] looked at all the evidence and concluded that a major fraction of the intelligence in our country on al Qaeda came from individuals, the three, only three people who were waterboarded… no one was waterboarded at Guantanamo by the U.S. military. In fact, no one was waterboarded at Guantanamo, period. Three people were waterboarded by the CIA, away from Guantanamo and then later brought to Guantanamo.

— May 3, 2011, in an interview with Fox News.

Rumsfeld repeated the line that year in interviews with CNN, CBS, the Associated Press, Charlie Rose and in a speech in February 2012.

Michael Hayden, former CIA director

Let me make it very clear and to state so officially in front of this committee that waterboarding has been used on only three detainees. It was used on Khalid Sheikh Mohammed, it was used on Abu Zubaydah, and it was used on Nashiri. The CIA has not used waterboarding for almost five years. We used it against these three high-value detainees because of the circumstances of the time.

–Feb. 5, 2008, in testimony to a Senate committee.

Hayden also reiterated the three-person figures in a memo circulated that month to CIA employees and on Meet the Press that March. He repeated it again in an interview with Newsweek in 2009.

John Yoo, former Justice Department official

Waterboarding we think is torture, but it happened to three people. The scale of magnitude is different….We’ve done it three times.”

–June 1, 2008, in an interview with Esquire Magazine.

Yoo also said three people had been waterboarded in a June 2008 congressional hearing.

Karl Rove, senior adviser to Bush

[Coercive techniques] were used against some thirty hard-core terrorist detainees who had successfully resisted other forms of interrogation. Only three were waterboarded.

–March 2010, in his memoir, Courage and Consequences.

Michael Mukasey, former attorney general

The fact is that Khalid Sheikh Mohammed, who was subjected to enhanced interrogation techniques, including waterboarding — he was one of three people who were waterboarded — did disclose the name — the nickname actually, which was the name that this courier actually used — in the course of the questioning that took place after enhanced interrogation techniques.

–May 17, 2011, in remarks at the American Enterprise Institute.

Jose Rodriguez Jr., former director of the National Clandestine Service at the CIA

In fact, only three detainees: Mohammed, Zubaydah and one other were ever waterboarded, the last one more than nine years ago.

— May 10, 2012: Jose Rodriguez Jr., in an op-ed on CNN.com

Rodriguez also mentioned the figure in interviews this spring with Fox News and the New Yorker.

Bill Harlow, who co-authored Rodriguez’ book on interrogations, said that Rodriguez stands by his statement. “These procedures were not done without extensive documentation and authorization, as part of an officially approved program, and all the documentation there shows three individuals,” Harlow said.

The other officials we’ve cited did not respond to requests for comment.

President Obama came into office proclaiming a ban on torture, stating that waterboarding was unequivocally a form of torture, and making the infamous “torture memos” public. But the administration has said no one would be prosecuted for waterboarding or other interrogation methods previously sanctioned by the government, and announced last month it would close the last two investigations into CIA abuse.

A Justice Department spokesman would not comment on whether the government ever investigated the Libyan cases. Laura Pitter, the author of the Human Rights Watch report, said that none of the men she interviewed said they had been contacted by U.S. investigators about their detention.

The CIA spokesman said that he could not comment on specific allegations, but that “the Department of Justice has exhaustively reviewed the treatment of more than 100 detainees in the post-9/11 period — including allegations involving unauthorized interrogation techniques — and it declined prosecution in every case.”

Photo Credit: AP/J. Scott Applewhite, File

by Cora Currier,ProPublica

Last week, the website Gawker published more than 900 pages of documents from Bain Capital, the private equity firm Mitt Romney founded, and headed from 1984 until 1999. The document dump didn’t reveal much about Romney’s personal investments, but it added a bit more to the pressure on Romney to release more of his tax returns. Romney and his wife Ann have repeatedly rebuffed such calls. In a primary debate in January, Romney said he’d paid “all the taxes that are legally required and not a dollar more.”

So what do we know about how he avoided that extra dollar? For an overview of the questions surrounding Romney’s tax strategies, see Vanity Fair’s comprehensive story “Where the Money Lives,” and this commentary from tax lawyers Edward Kleinbard and Peter Canellos. We’ve also rounded up the best reporting on the central controversies.

What’s Been Disclosed?

Romney has released his 2010 tax return, and an estimate of his 2011 return. (He filed for an extension this year and has said he’ll release the full returns when they are finished. The deadline is Oct. 15). We also have 2010 returns for blind trusts for Romney, Ann, and their family, and the family foundation, as well as financial disclosures from his campaigns, beginning with his 2002 Massachusetts gubernatorial run.

Mitt Romney said recently that he has paid “at least 13 percent” in federal income taxes each year, but the campaign won’t go into more detail (for a closer look at his 13.9 percent rate in 2010, see our previous reading guide). Ironically, it was Mitt Romney’s father, George, who set the precedent for the kind of comprehensive disclosure that’s standard for most presidential candidates: During his 1967 bid for the Republican nomination, he released 12 years of tax returns, saying that just one or two seen in isolation could be misleading.

Romney’s Bain Career

Buyout Profits Keep Flowing to Romney, New York Times, December 2011The New York Times laid out how Romney’s generous retirement deal let him keep investing in new Bain funds for 10 years after he left the company in 1999. He got a share of the profits from 22 funds, as Bain’s assets grew 20-fold. (If you’re hazy on how private equity, or leveraged buyout firms, as they used to be commonly known, actually work, see Marketplace’splain-speak explanation.) Such retirement deals aren’t without their critics among tax professionals. Lee Sheppard of the blog Tax Notesargues that compensation packages should not include capital gains from funds which the individual had nothing to do with.

Romney using ethics exception to limit disclosure of Bain holdings, Washington Post, April 2012 Candidates for federal office are required to disclose financial holdings, but since the 2004 election, the Office of Government Ethics has let candidates postpone reporting underlying assets in accounts that are bound by confidentiality agreements. That applies to most of Romney’s Bain assets. It’s not the first time a presidential candidate has used the confidentiality exception — in fact, in 2004 Democratic nominee Sen. John Kerry didn’t report the underlying assets held in a Bain Capital fund by his wife, Teresa Heinz Kerry. But the size and portion of Romney’s assets that are shielded are unprecedented, according to the Post.

Romney’s Tax Rate

Why Mitt Romney’s Tax Rate is 15 Percent, Planet Money, and Romney as Multimillionaire Gets Break for Taxes, Bloomberg, January 2012 Much of Mitt Romney’s “income” from his private equity career likely isn’t considered income at all, but something called carried interest. Private equity firms (like hedge fund managers) are paid along a “two-and-twenty” model — a fee of two percent of the assets under management, and then 20 percent of whatever profits there are, the “carried interest.” The fee gets taxed as income, at a rate of 35 percent, but the carried interest is treated like investment income, and so it is taxed at the capital gains rate of 15 percent. There’s debate over whether that’s fair. That carried interest is a part of managers’ fee-structure, so some argue it should be considered earned income rather than capital gains. In 2007, members of Congress proposed legislation that would make carried interest be taxed as income. (For more on the debate, see also our previous reading guide).

Romney’s Management Fee Conversions, Victor Fleischer, August 2012 About that two percent in the two-and-twenty model. Colorado University Law School professor Victor Fleischer noted that the Gawker documents show that for several funds in which Romney was invested, Bain had waived the two percent fee, in exchange for another profit share arrangement. According to the Times, the documents show four Bain funds converted $1.05 billion in fees into capital gains. In this model, if there are profits, the fee, which had been taxed as ordinary income, is now converted into carried interest, and taxed at the much lower 15 percent rate.

Fleischer, whose research fueled efforts in Congress to tax carried interest as income, maintains that such conversions are illegal. The risk that Bain takes by waiving the fee, he argues, is immaterial, because the firm is so well-positioned to know which investments will succeed. If fee conversions are indeed illegal, they are nonetheless widespread in the private equity world; Fleischer doesn’t know of any cases in which the agency has challenged them.

Romney has reported investments in some of the funds that waived fees, but since we don’t have specifics, we don’t know for sure if or how he benefitted from the conversions.

Overseas Accounting

Romney’s IRA’s off-shore investments: helping his tax bill?Wall Street Journal, January 2012 While the Gawker documents provide a detailed look at how Bain runs offshore accounts, we’ve known for some time that Romney has considerable assets stashed in them. Romney said Sunday that Bain uses accounts in the Cayman Islands and elsewhere to attract foreign investors, and that he’s gotten “not one dollar reduction in taxes” from the offshore accounts. But as the Journal reported back in January, that claim is misleading. Non-profits and large retirement accounts can be subject to the “unrelated business income tax,” which is meant to keep tax-exempt entities from competing with commercial businesses. If Romney’s IRA was invested in Bain funds in the U.S., it would probably be subject to the tax. By investing in blocker-corporations — offshore partnerships that then make investments for them — IRAs avoid it.

Documents Show Details on Romney Family’s Trusts, New York Times, August 2012 The Times lays out what the Gawker documents show about Bain’s use of an investment strategy known as equity or total-return swaps. It’s a strategy, widely in use, that lets non-U.S. investors avoid a tax on dividends paid by American companies. An offshore fund will enter an agreement with a U.S. bank or brokerage firm, in which the American company “owns” stocks, but transfers all the gains or losses to the offshore fund, in exchange for interest. The swaps are side-bets, mirroring the motions and benefits of owning stocks, but aren’t subject to the dividends tax. Congress passed legislation curbing such swaps, and pending IRS regulations are supposed to put a stop to them, but they aren’t fully in effect yet.

Aside from the IRA account, what’s the motivation for an American individual like Romney to invest overseas? It may just be to have access to investment funds that are held offshore to attract foreigners, as Romney has explained. Still a little murky are entities like the Bermuda-based Sankaty High Yield Asset Investors Ltd., wholly owned by Romney and the subject of scrutiny from Vanity Fair and the Associated Press. Edward Kleinbard, a professor at the University of Southern California’s Gould law school, says there are legitimate reasons Romney might have organized such a corporation to serve a specialized tax purpose, but without full disclosures, “there’s no way to know why he needs to hold Sankaty, personally, overseas.”

Tax Credits Shed Light on Romney, New York Times, August 2012 An in-depth look at how Romney, like many wealthy individuals, has used foreign tax credits to reduce his U.S. tax bill. In 2010, Romney claimed nearly $130,000 in foreign tax credits. Unused credits can be rolled over from year-to-year, making them a handy tool for offsetting gains in particular years. Again, nothing illegal, but another way to apply the complexities of the tax-code so as to minimize his bill.

Boston Lawyer Keeps Steady Hand on Romney’s Holdings, Boston Globe, January 2012 In an interview with the Globe, R. Bradford Malt, the lawyer in charge of Romney’s trust, defends the use of a (now-closed) Swiss bank account. The Swiss account was opened in order to diversify Romney’s investment in foreign currencies, not to hide assets, Malt says. The Swiss account was initially left off the federal financial disclosure Romney filed last year, in what his campaign called an oversight. We don’t know if Romney reported the account in earlier tax returns, or in required reports to the Treasury aimed at preventing money-laundering and other offenses. Non-reporting of Swiss and other accounts was widespread until an IRS crackdown in 2009.

Romney’s Children’s Trust

A Clue Emerges to Romney’s Gift-Tax Mystery, Wall Street Journal, August 2012 The Romneys established a trust for their heirs, which is now worth roughly $100 million. The campaign told the Journal that Ann and Mitt have never paid gift taxes on contributions to the account, because they were under the lifetime maximum — $600,000 each in 1995, then $1 million, until a recent exemption raised it to $5.12 million. Even the couple’s maximum contributions still would have had to grow ten-fold to get to $100 million.

The Journal uncovered a 2008 presentation by Ropes & Gray, a law firm that has advised Bain Capital (and where Malt, Romney’s trustee, is a partner). It reveals one strategy that was apparently common until about 2005: Because carried interest is a share in potential profits, it could be given away at low or even zero value, since those profits theoretically might never materialize. It’s hard to believe that an established private equity firm like Bain could really envision no profits from that carried interest, raising questions about whether those were fair-market valuations of the gifts. A Romney adviser told the Journal that the Ropes & Gray presentation described industry practice, and that one “should not assume” the Romneys took advantage of the strategy. This mystery wouldn’t necessarily be solved if Romney released his tax returns, since gift-tax returns are filed separately.

Romney’s Enormous IRA

Bain Gave Staff Way to Swell IRAs by Investing in Deals, Wall Street Journal, March 2012 Romney has somewhere between $20 million and $102 million in an individual retirement account. Given the limits on contributions to IRAs, that’s an unusually large one: According to the Boston Globe, even an IRA with $20 million would put him in the top .001% of such accounts. One way it might have grown so spectacularly: Bain employees had the opportunity to invest, via their retirement accounts, in the company’s deals. Employees often bought high-risk, low-cost shares for their retirement accounts. During Bain’s boom, they exploded in value, with none of it taxed in the short-term. Were those shares undervalued when they were placed in IRAs? According to the Journal, tax lawyers couldn’t point to an instance where the IRS challenged valuations in private equity retirement accounts. Romney did use his IRA to co-invest in Bain deals, but it’s not apparent whether he used the strategy outlined by the Journal.

Blind Trusts

Mitt Romney’s Blind Trust Not So Blind, ABC News, December 2011 When faced with questions about his investments in offshore accounts or carried interest, the Romney campaign generally points to the fact that since 2003, when Romney became governor of Massachusetts, his assets have been held in a blind trust, over which Romney has no control. But some have questioned whether Romney’s trustee, who is his personal lawyer and longtime associate Malt, is too close to Romney to make the trust truly blind. ABC noted a million-dollar investment in a company founded by Romney’s son, Tagg. The trust would not meet the requirements for federal office, which hold that an institution with no financial ties to the official must control the assets.

Rafalca the Horse

Romneys Have Tax Deduction with Olympic Hopes on Rafalca, Bloomberg, July 2012 Since you’ve made it this far, one more nugget of controversy: On their 2010 returns, the Romneys claimed their Olympian dressage horse was a business, not a hobby. It’s not a profitable business, though; Ann Romney reported a $77,731 loss for the year. For a business, with losses, Ann was able to claim a deduction, Bloomberg says, though only $50 that year. According to Bloomberg, the IRS regularly challenges people who classify their horses as a business.

Photo by Gage Skidmore via Flickr.com