Saturday, October 05, 2013

CSE and "foreign partner" money

Further to this post (Does CSE receive cash from NSA?), page 6.43 of Volume 1 of the Public Accounts of Canada 2012 indicates that CSE spent $358,442 from its "Foreign Partners -- Security" account in fiscal year 2011-12 and that $2,253,491 remained in that account at the end of that fiscal year. (In fact, for reasons that will be explained below, CSE almost certainly spent at least $844,579 from the account last year.)

What is the "Foreign Partners -- Security" account? Page 6.50 of the Public Accounts document explains that these accounts "were established to record funds received from foreign partners, to cover expenditures to be made on their behalf, in accordance with the provisions of agreements with the Government of Canada."

In principle, the term "foreign partners" could refer to any of CSE's "Second Party" partners (NSA, GCHQ, DSD, and GCSB), or even to other foreign governments, agencies, or entities, but in practice it almost certainly refers to NSA, CSE's closest and largest partner, and the only one with a budget measured in 11 figures.

CSE's "Foreign Partners -- Security" account appears for the first time in the 2012 Public Accounts, but this does not necessarily mean that the account did not exist prior to fiscal year 2011-12.

CSE did not become a stand-alone agency until November 2011, i.e., in the middle of fiscal year 2011-12, so any earlier version of the account would have appeared as a Department of National Defence account. And, sure enough, a "Foreign governments -- Security" account did exist within DND's accounts from FY 2002-03 until FY 2011-12, when it was zeroed out. (You can see its last appearance just above the new CSE account in the 2012 Public Accounts.) It seems nearly certain that the new CSE account is simply a continuation of the DND account under CSE's name.

The DND account stood at $3,098,070 at the beginning of FY 2011-12, and $2,611,933 was credited to the CSE account when it was created, so (assuming that the latter account is indeed a continuation of the former), at least $486,137 must have been spent from the account prior to its mid-fiscal year transfer to CSE. Adding that sum to the $358,442 spent by CSE after the account came under its name makes a total of at least $844,579, as mentioned in the first paragraph of this post. I write "at least" because this calculation assumes that all of the money credited to CSE's account came from unspent money in the DND account. If the NSA (or other foreign agency) credited money to CSE's account during the fiscal year, then more must have been spent from the DND account. The theoretical maximum that could have been spent from the two accounts during the fiscal year (assuming sufficient funds were added) is $3,456,512.

If the DND account is indeed the progenitor of the CSE account, then its record from FY 2002-03 is instructive. At least $10,788,179 has been credited to the account since its apparent inception, and at least $8,534,688 of that money had been spent by the end of FY 2011-12. Both the receipt and the disbursement of the funds has been episodic, with more than $2 million received in some years and nothing received in other years and more than $2 million spent from the account in some years and nothing spent in other years.

These facts suggest that the money is not provided as some sort of annual subsidy for CSE's operations.

The total amount provided -- roughly $10.8 million -- represents only 0.37% of the combined $2.937 billion spent on CSE by the Canadian government during those years. This also suggests that the foreign funds, although not an insignificant amount of money, are not intended to substantially subsidize CSE's operations.

It seems more likely, therefore, that the money is spent, as the account's own description suggests, by CSE "on behalf of" NSA -- to obtain information or conduct activities in Canada for NSA's use or benefit.

One possibility, perhaps far-fetched, is that NSA is purchasing access to communications metadata from Canadian telecommunications providers with the assistance of the Canadian government. But that's just a wild guess on my part and probably more likely to be wrong than right.

Still, the U.S. government doesn't need to send money to the Canadian government in order to purchase normal goods and services in Canada. If NSA is sending money to CSE and asking the Canadian government to spend it on its behalf, it seems likely that it is to do something that requires the legal or regulatory powers of the Canadian government and that our government wouldn't otherwise have chosen to do for its own reasons.

It would be interesting to know what that is.

[Update 22 October 2013: I was recently informed that this money does indeed come from one or more of the "Five Eyes" agencies. Sounds like NSA to me.]

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