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The Brothers Krongard

Two Brothers and Two Scandals

by DAVE LINDORFF

The State Department’s top internal investigator, Inspector General Howard Krongard, revealed in a House Oversight and Government Reform Committee hearing Tuesday, that his brother, Alvin B. Krongard, was a member of the advisory board of Blackwater, the very private mercenary company whose bloody, murderous behavior the IG office was supposed to be investigating.

Unmentioned in reports on this tainted relationship was the fact that Alvin Krongard, the former third-ranking leader of the CIA from 2001-2004, has also been the subject of some speculation regarding possible foreknowledge of the 9-11 attacks by some within the intelligence establishment.

Alvin Krongard joined the CIA in 1998, leaving a post at Bankers Trust, which, in 1997 acquired the venerable investment-banking house of Alex Brown. Prior to the acquisition, Krongard had been CEO and chairman of the board of Alex Brown. In the merged firm, he became head of private banking for Bankers Trust, where he was responsible for the bank’s relations with extremely wealthy (and extremely private) clients.

What makes this history of particular interest is that Alex Brown was the investment bank that handled most of the suspicious short-selling "puts" that were placed on the stocks of four companies-United Airlines, American Airlines, Morgan Stanley Dean Witter and Merrill Lynch-that were pummeled by the 9-11 attacks.

As has been reported in Bloomberg Financial News Service reports and in the San Francisco Chronicle, in the several days preceding September 11, 2001, unidentified investors placed an unusual number of "puts" on the stocks of the two airlines whose planes were hijacked that day, as well as on the two investment banks, one of which occupied 22 floors of one of the World Trade Center towers and the other of which owned a building directly across the street which was significantly damaged and forced to close down.

According to news reports, between Sept. 6 and Sept. 9, some 4744 put orders were placed on United Airlines, compared to just 393 calls (bets that the stock would rise). On September 10, 4516 puts were placed for American Airlines stock, vs. only 748 calls. These orders were six times the normal volume of puts and calls on the Chicago Board Options Exchange for those firms. Moreover, there were no such puts placed on any other airlines, and there was no news justifying such orders at the time. In the three days prior to 9/11, 2151 puts were placed on Morgan Stanley shares, and 12,115 puts on Merrill Lynch, companies that also were not at the time the subjects of any negative news.

The stocks of those four companies, following the attacks and the collapse of the Twin Towers, subsequently tanked, making the combined puts worth about $16 million.
According to the San Francisco Chronicle, no one collected the $2.5 million in profits from the puts placed on United Airlines. The identities of the investors in the put orders have never been disclosed by Alex Brown.

Incredibly, there was never any serious investigation of these peculiar and suspicious investments, though they clearly suggest that someone knew something was going to happen that would make those four companies’ stocks plunge in value.

The US corporate news media has never pursued this story or in many cases even reported it, nor was it seriously investigated by the FBI or the 9-11 commission.

Could Krongard, in his role as executive director of the CIA, have had inside information in the days ahead of the attacks, that an attack on the World Trade Center, involving the hijacking of planes operated by UAL and American Airlines, was imminent? Could he have supplied that information to clients of Bankers Trust and its subsidiary Alex Brown, so that the put investments could be made? If so, who else in the federal government knew?

We can’t know, because, amazingly, nobody’s dragged Krongard or officials of the bank before a congressional panel and demanded answers under oath.

So now we see that the Krongard brothers have a level of integrity that is down in the sewer, with one working for a murderous mercenary outfit that has been slaughtering innocent Iraqis in the course of providing "protection" to State Department officials in Iraq, and the other pretending to investigate the activities of that private firm, never mentioning the grotesque conflict of interest of having his brother working for the very firm he’s supposedly investigating.

Maybe, given this sorry picture, House Oversight Committee Chair Rep. Henry Waxman will finally see fit to call Alvin Krongard and other witnesses in to question them under oath about whether he also had a conflict of interest in serving as a top ranking CIA executive while perhaps maintaining links with Alex Brown, and whether he had anything to do with those peculiar puts.

DAVE LINDORFF is the author of Killing Time: an Investigation into the Death Row Case of Mumia Abu-Jamal. His n book of CounterPunch columns titled "This Can’t be Happening!" is published by Common Courage Press. Lindorff’s newest book is "The Case for Impeachment", co-authored by Barbara Olshansky.

He can be reached at: dlindorff@mindspring.com