Former Wal-Mart Worker Blows Whistle on Company Surveillance Operation, Spying of Critics

April 06, 2007


Gary McWilliams

reporter for The Wall Street Journal. He joins us from Houston.

A former worker at Wal-Mart is claiming the retail giant is running a sophisticated surveillance operation that targets employees, journalists, stockholders and critics. The worker, Bruce Gabbard, says the retail giant spied on employees, journalists, stockholders and critics of the company. We speak with the Wall Street Journal reporter who broke the story. [includes rush transcript]


This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: Watching the watchdogs. A former worker at Wal-Mart is claiming the retail giant is running a sophisticated surveillance operation that targets employees, journalists, stockholders and critics. Bruce Gabbard was fired last month for intercepting and recording phone calls to and from a New York Times reporter. Gabbard told The Wall Street Journal he was part of a broader surveillance operation run out of Wal-Mart’s Arkansas headquarters. Employees reportedly nicknamed their work area "the Bat Cave."

Gabbard also revealed Wal-Mart infiltrated the group Up Against the Wal last year by sending a long-haired employee wearing a wireless microphone to one of the group’s meetings. A Wal-Mart surveillance van was stationed outside the meeting in order to listen in to what was happening. Wal-Mart also reportedly closely monitored the Internet and phone usage of employees at work. Managers received a list of email addresses and phone numbers with which their employees have communicated and a list of websites visited. Wal-Mart also developed a system to read the personal emails of workers sent or received from private accounts, such as Hotmail or Gmail.

After The Wall Street Journal story ran, Wal-Mart issued an apology, but only to shareholders that were monitored under the surveillance operation.

In a few minutes, we’re going to speak with an activist who was targeted by the surveillance, but first we’re joined by one of the two reporters who broke the story. Gary McWilliams is a reporter for The Wall Street Journal. He joins us from a studio in Houston. Welcome to Democracy Now!, Gary.

GARY McWILLIAMS: Good morning, Amy.

AMY GOODMAN: Well, why don’t you lay out the story? First, how did you discover what Wal-Mart was doing?

GARY McWILLIAMS: Well, it was about five weeks ago. The company announced they had fired a technician for recording conversations with a New York Times reporter and recording pager messages sent over its internal network. We started looking into it then, and what we found was a very sophisticated, very extensive operation run by former FBI agents, headed by a former CIA agent in his Bentonville headquarters.

Mr. Gabbard spoke with us, described the operation in quite detail and helped draw a picture, really, of a company that had an executive security program, global security, threat protection, information security. A quite extensive operation.

AMY GOODMAN: Talk about the man who became the whistleblower.

GARY McWILLIAMS: You know, Mr. Gabbard is a former marine. He was a reserve deputy sheriff in Benton County, outside of — that encompasses Bentonville. But, you know, the interesting part, this goes back to post-9/11. What he described to us was, at that time some FBI had set up a program asking U.S. corporations to look for terrorist cells, using their phone systems to record calls from places like Syria, Iran, North Korea. And Mr. Gabbard helped set that system up. And in the wake, several years later, that same system was used to record calls from a reporter.

AMY GOODMAN: Explain the first part. How did he monitor these calls to these other countries?

GARY McWILLIAMS: Well, they set up a system with their PBX internal telephone system that would look for phone numbers coming from rogue countries, essentially, to them, and then record those calls looking for sleeper cells, perhaps, within their workforce or for terrorists calling in.

And now, this sort of security operation took on a second wind about two or three years ago, when embarrassing memos started appearing on Wal-Mart Watch’s website. And those sort of triggered a new round of looking for information leakers inside the company, and they used, again, a very sophisticated email snooping system to look for key words in messages going outside the company.

AMY GOODMAN: You write in the piece in The Wall Street Journal that Mr. Gabbard says he was directed by two former FBI agents working for Wal-Mart who set up this system to monitor foreign calls originally?

GARY McWILLIAMS: Right. Like a lot of companies after 9/11, Wal-Mart took a look at its security systems and decided it needed to sort of beef them up. And what we saw from them was a very sophisticated ramp up of people and equipment.

AMY GOODMAN: And where did Pentagon technology fit into this story?

GARY McWILLIAMS: It’s very interesting. You know, a lot of corporations have systems that filter emails, that look for keywords that suggest wrongdoing. What Wal-Mart did was acquire a system used primarily in the past by the Defense Department that was much more sophisticated. It could do things such as tell the degree of flesh tone on an image that was viewed. It could look at all content going over its corporate network. And where typical email monitoring systems would look at the corporate email system — you know, your internal network — what this system was able to do was look at any content passing, so if you accessed a Gmail system, for instance, it could see what you’re seeing.

AMY GOODMAN: And you write the whole issue of flesh tones has to also do with whether people are viewing pornography?

GARY McWILLIAMS: Correct. You know, most companies have a system to prevent harassment and prevent wrongdoing by employees, but this is fairly advanced. We spoke with a head of an information security network that said it was quite above what most companies have.

AMY GOODMAN: You also write that Wal-Mart helped the Pentagon develop technology.

GARY McWILLIAMS: Well, exactly. This system was not helping the Pentagon. What it was was it was helping a software developer perfect the system. We mentioned the system was used primarily by the Defense Department. Wal-Mart was helping develop a commercial version.

AMY GOODMAN: Oakley Networks, what is this company?

GARY McWILLIAMS: It’s a Utah software company that provides a software package called CoreView that looks at information going over a network, and it’s so sophisticated, it allows you essentially to replay later exactly what an employee would have seen on his screen or done with his computer. They describe it as sort of a TiVo-like replay.

AMY GOODMAN: Monitoring keystrokes.

GARY McWILLIAMS: At one level, yes. But, again, it’s — think of it as a TiVo player, where you can replay activities, you know, done in the past. This is quite the same way. They can replay your computer screen to show exactly what you were seeing and changes you were making to it.

AMY GOODMAN: The well-known multinational company McKinsey, where does it play in here?

GARY McWILLIAMS: Well, at one point —- now, one of these embarrassing memos that Wal-Mart felt had been leaked from internally, McKinsey had helped work on that memo. It was their Susan Chambers healthcare memo, if you recall it. Subsequent to that -—

AMY GOODMAN: Explain what the Susan Chambers memo was.

GARY McWILLIAMS: It was an internal document sent to the board of directors proposing ways to reduce their healthcare costs. Among those, you know, was requiring employees to do more physical chores to essentially weed out those that were sickly, unhealthy, and therefore cut their healthcare costs.

AMY GOODMAN: So go on with your point.

GARY McWILLIAMS: What the — you know, the company was embarrassed by this, obviously. And there was a stream of other memos that started leaking out after 2005. And Mr. Gabbard tells us, you know, part of — he was approached by the head of security to help stop those leaks, and he used the Oakley system essentially to monitor Internet access by McKinsey consultants doing a later project.

AMY GOODMAN: We’re talking to Gary McWilliams, one of the two Wall Street Journal reporters who broke the story on — well, the headline: "Inside Wal-Mart’s 'Threat Research Operation.'" So tell us what happened to Mr. Gabbard, to the whistleblower who worked for some nineteen years, how exactly this whole thing unraveled and came to be known?

GARY McWILLIAMS: Mr. Gabbard was fired a little more than a month ago as a result of another employee, I guess, going forward and saying that he felt there was something wrong here in taping the New York Times reporter’s calls into the company.

AMY GOODMAN: That was Michael Barbaro, the New York Times reporter?

GARY McWILLIAMS: Correct. And as a result of that, they did a month-long investigation of the activities, and he was dismissed thereafter. Now, we spoke with Mr. Gabbard, because he felt the company had misportrayed his activities. You know, they portrayed him as a rogue employee, when, in fact, he felt quite a bit of what he was doing was sanctioned by higher-ups and, in fact, he was pressured into looking — you know, stopping those leaks by higher-ups in the company.

AMY GOODMAN: In a moment, we’re going to be speaking with Nu Wexler, who is a spokesperson for Wal-Mart Watch, a group that is critical of Wal-Mart. But tell us his story.

GARY McWILLIAMS: Mr. Wexler, I think, was attempting to visit with reporters attending a Wal-Mart media event a couple years ago, and what Mr. Gabbard tells us was the security group was looking for ways of identifying him if he showed up at that meeting. And so, Mr. Gabbard went out on the web searching for information on Mr. Wexler and found a blog he had written for the South Carolina Democratic Party, rummaged through that South Carolina computer and found a folder containing Mr. Wexler’s vacation photos. And he used those to access and to provide them to Wal-Mart corporate security to identify Mr. Wexler when he showed up.

AMY GOODMAN: A Wal-Mart spokesperson declined our request for an interview, but did issue a statement in response to Gabbard’s accusations. Wal-Mart says, "This group is no longer operating in the same manner that it did prior to the discovery of the unauthorized recording of telephone conversations. There have been changes in leadership, and we have strengthened our practices and protocols in this area. Mr. Gabbard and another associate were terminated for their actions of unauthorized recordings of telephone conversations and interception of text messages, and the company self-reported the incident after learning of the phone recordings and interception of text messages situation. Like most major corporations, it is our corporate responsibility to have systems in place, including software systems, to monitor threats to our network, intellectual property and our people. These situations are limited to cases which are high risk to the company or our associates, such as criminal, fraud or security issues." Can you respond to this, Gary McWilliams?

GARY McWILLIAMS: Well, no. I mean, Wal-Mart issued that statement, I think, recently after our story appeared, and they issued a statement a month ago when Mr. Gabbard was terminated. But, essentially, you know, their original statement said that he had violated common practice at the company. Mr. Gabbard maintains there was no policy that prevented him from recording those calls and, in fact, he had been urged post-9/11 to record calls and look for keywords. So I’ll leave it to Wal-Mart to decide.

AMY GOODMAN: You also talk about Wal-Mart monitoring shareholders. Explain.

GARY McWILLIAMS: Yeah, you know, it was a fairly uncommon practice, from what we’ve seen, to look at shareholders who submitted resolutions for the annual meeting. And in this year, what we saw was that the company took those list of shareholders who presented petitions and sent it to their security group to do a "threat assessment" of these people for their potential to disrupt the annual meeting if their petitions were refused. And, you know, we spoke with Dr. Sydney Kay, an 85-year-old retired science teacher, you know, who was among those looked at. And Mr. Kay says, "I’m a nobody. Why would they want to look at me?"

AMY GOODMAN: Overall, you did talk to corporate practices people. How common is this behavior on the part of a corporation?

GARY McWILLIAMS: For some things are very common. I think most Americans are told, if you’re using your corporate email system, you know, the law has upheld the right of the company to look at that email. And there are just dozens of software packages that do things like filtering, web filtering, to look at what you’re looking at over the Internet, tracking the URL address, for instance. And companies are allowed to look at your email used on the corporate system. Typically what they don’t do, though, is, you know, track your access to, say, Yahoo mail or Hotmail or Gmail.

AMY GOODMAN: And finally, the issue of Wal-Mart infiltrating an anti-Wal-Mart group, Up Against the Wal — that’s W-A-L — what did you learn about that?

GARY McWILLIAMS: What Mr. Gabbard had told us was, you know, the company had become concerned that that group had protested at one of its managers’ meetings, and it had read on Internet sites that it was planning on going to its shareholder meeting last year, and potentially going with ACORN. And that concerned them. They wanted to find out about that, and so they ended up sending an employee to a protest group to find out what might be going on, whether ACORN and Up Against the Wal were joining forces. But it was fairly sophisticated. Again, you know, the employee had a wireless microphone. Mr. Gabbard said he rode around in the company’s surveillance van to listen to what was going on and make sure the employee was protected. And then they used the information later to alert the local police department about the protesters’ plans.

AMY GOODMAN: And so, the infiltrator, the long-haired infiltrator, went into a meeting, and the van was outside monitoring, because the infiltrator was wearing a microphone?

GARY McWILLIAMS: Essentially, yeah. It was outdoors. I mean, I think they actually recorded a protest group in Fayetteville, Arkansas, and the employee ended up joining the protest march down the street.

AMY GOODMAN: You know, it strikes me that years ago Ralph Nader really began his PIRGs with money that he got from General Motors, because it was exposed that they were monitoring and surveilling him.

GARY McWILLIAMS: I’m not familiar with that. But, you know, you have to understand that anytime you’re in a public place, anyone can monitor you. They can take your picture. They can follow you, as long as it doesn’t cross a line to harassment. And the same thing with — we talked about the courts have upheld the legality of a company looking at email on a corporate network.

Wal-Mart has quite strict policies. I’ll just go on. You know, they tell their employees any use of company computers or phones could be monitored. They also limit what their employees can look at on the Internet. They’re fairly restrictive in that regard.

AMY GOODMAN: Well, Gary McWilliams, I want to thank you very much for joining us, Wall Street Journal reporter, joining us from Houston, broke the story, "Inside Wal-Mart’s 'Threat Research Operation.'"

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