The H-1b program and outsourcing of technical work to India pose a grave security risk to the government of the United States. This risk has military, financial and political dimensions. The H-1b program (and related L1 Visas) are programs that allow corporations to bring foreigners to work in the US. These visa programs are supposed to be limited to areas in which special skills are needed and in which there is a shortage local talent, but in practice, these programs have been widely used particularly in the computer industry. In 1998, the United States congress started an expansion of the H-1b visa program from 65,000 visas/year that grew to 195,000 Visas per year in 2000. The program was expanded with very little oversight or political debate and against overwhelming grassroots opposition (the US public opposed this expansion 5-1 according to a Harris poll cited at http://www.ieeeusa.org/releases/1998/pr091698.html). Out of 100 senators, 96 voted for the H-1b program (Hollings of South Carolina voted against it, Joe Lieberman of Conn., Feinstein and Boxer abstained). That kind of support doesn't come without a lot of political donations in today's climate. None of the top 50 house recipients of computer industry funds according to www.opensecrets.org voted against H-1b visa expansion. Microsoft was, in the 2000 election, the number one political donor. Microsoft is a heavy user of H-1b Visas and about half of all Microsoft employees and contractors are now of Indian descent. Microsoft was far from alone, with companies like Arthur Anderson, Oracle and Price Waterhouse Coopers sharing this role as both big political contributors and addicted to importation of technical professionals. At www.zazona.com you can see who the heavy users of H-1b workers are and how a company uses this program. Today, many managers, executives and technicians of key financial and technical infrastructure at "US" corporations are, in fact, foreign nationals but holders of H-1b or L1 Visas.

The H-1b program has already played a major supporting role in a major national scandal. Both Arthur Anderson and its client Enron were exceptionally heavy users of the H-1b program. The major country of origin of H-1b workers is India. Of Enron’s $19 billion capital losses, at least $4 Billion involved investments made in India - investments of a nature that really shouldn't have been terribly risky (i.e. investment in a power utility). It is plausible that the movement of $4 Billion in capital to various shadowy interests operating out of India is simply coincidental with the fact that the technical infrastructure of Enron and Arthur Anderson were both heavily influenced by H-1b workers from India. It is also plausible we are looking at the tip of a much larger iceberg here. For example the staff that operates the computers in a corporation can easily "shake down" the management of that organization if they discover something illegal going on and have the proper contacts to leverage that information.

The real origins of the H-1b program haven't been properly analyzed yet. This would need to look at things like how folks that were illegal immigrants were converted to H-1b visas during the early expansion of the program. H-1b wasn't just something that a few high-tech firms cooked up all on their own. H-1b and off-shore placement of software in India specifically has been driven heavily by stock analysts and Wall Street interests at the same time US venture capital has been sharply cut back. One key to get here is that Venture Capital funds for the computer business ultimately come from a very few firms - and that Wall Street analysts more heavily influence computer firms than other firms (due to the volatility in the stock prices of technology stocks and the large sums of money involved).

A proper analysis of the origins of the H-1b will likely show that the H-1b program and related outsourcing to India had its origins in the financial sector-particularly in businesses that have a history of extreme controversy, scandal and legal actions against higher management. New York remains the home of some of the most extreme abuses of the program. There was also a tendency for these businesses to rely heavily on illegal immigrants before the H-1b program was expanded - particularly in the New York financial community. These financial businesses are among the least price-sensitive of all consumers of technical resources. What drove them to early adoption of illegal immigrants and H-1b workers? The answer is simply control. A US citizen is rather dangerous to a corporate exec whose business practices mean he is risking prison time.

Also, keep in mind that many businesses in the US have an important aspect of their business that is illegal (this is especially common in the financial arena). US citizens are much more likely to understand the illegal nature of these businesses and thus more likely to act as "whistle blowers". Foreign nationals can be sent home relatively quickly -- particularly if they are in the US illegally. This might explain for example why quite a few illegal immigrants were and are used in the New York financial community -- sometimes seemingly in preference for US citizens/permanent residents. INS law isn't generally enforced, but that still doesn't mean that wealthy and powerful interests can't get it enforced in key situations where they need it enforced. The use of foreign nationals in America offers businesses something that they can't get from the local population: technical workers legally held in submission. A return to slavery might have been optimal according to this mindset-but the H-1b program-and a de-facto return to indentured servitude- was the practical alternative these corporate interests could actually implement. H-1b was largely a means by which businesses that had used illegal immigrants to conduct businesses on the edge of legality handled a population that was growing large enough that it needed to be taken "legit".

The New York Financial analyst community drove Silicon Valley businesses to the replacement of American technical workers before there was clear-cut evidence this was good practice. This is the type of thing that smacks of a high-level deal or emotion-based decision making. The credibility of Silicon Valley high tech businesses as engines of growth was used as a cover so that the program could be greatly expanded, specifically to avoid any taint of impropriety. Furthermore, the H-1b program propped up dangerously expensive real estate prices in Silicon Valley.

Since its inception, H-1b has been a sacred cow program. In the 2000 election, all major candidates had received major Information Technology Association of America member funding and all supported major H-1b expansion-even though a Harris poll indicated that over 80% of the American public opposed that H1-b expansion. The events of September 11, 2001 have caused a reexamination of H-1b. The Pentagon has issued guidelines for use of H-1b labor in "critical infrastructure" but for most tech workers, little has changed. According to one congressional staff member I spoke with, companies are supposed to be liable for crimes committed by visa holders they sponsor. Still, as a whole, participants in the legal visa programs have passed on enormous costs to the public. Several of the 19 World Trade Center attackers were legal visa holders or folks that had overstayed their visas. Responsible estimates have placed the financial costs of the destruction of the World Trade Center at 60 Billion dollars. The simple fact is that the companies that profited from legal visas have not paid those costs -- they were passed onto the general public. The various non-immigrant visa programs are quite expensive sources of technical workers if you really factor in all the costs.

The expansion of the H-1b program has been accompanied by dramatically increased unemployment among US tech workers -- particularly those that are middle aged. The expansion of the H-1b program has also been accompanied by a dramatic reduction of US students seeking education in technical fields. The reason is simple economics: demand for technical workers is relatively inelastic. US technical workers have been prone to flee urban areas in the US that have been technical centers because of unlivable conditions, poor working conditions and distrust of management. The H-1b program was a prop that allowed some very sick companies to hang on a bit longer than they might have otherwise. Hewlett Packard for example is a very large company with a diverse product line. The only parts of the company that made money before the recent merger were the printer division and the division that sells larger servers. The H-1b program’s advocates made many promises -- none of which have been delivered upon -- but still it persists. Why?

Despite the fact that the H-1b provisions prohibit using it to lower wages, the replacement of American workers via H-1b is often regarded as something that is a cost savings nature. Certainly, this is part of how the whole thing has been sold to upper management in many cases. In some cases, however, we have people that have obtained managerial authority in major corporations that are "burning out" their personal capital to get green cards for "friends and family". Many Indians work in the US for a lower standard of living than they would expect in India -- specifically to get a chance at the "brass ring" of a US green card. Essentially US citizenship and residency rights have been converted into corporate perks by the H-1b program. One example of how dramatic this is: some Indians are part of a dowry system in which it is traditional for a bride’s parents to make a substantial gift to the groom upon marriage. The going rate for a young engineer in India is about $50,000. For a young engineer who is settled in the US as an H-1b worker, the going rate is $150,000. What are this young woman’s parents paying for: the chance their grandchildren will become US citizens. This is the phenomena that has led Reagan’s Nobel prize winning economics advisor Dr. Milton Friedman(hardly an anti-corporate activist) to call the H-1b program a “subsidy” to corporate interests.

However despite the subsidy involved in the H-1b visa program it isn’t clear that this is really paying for corporate shareholders. Somehow, Indians have developed a reputation of being technical wizards even though there has never been a major technical breakthrough that has come from an Indian University. Some very astute businessmen that have become billionaires, but nothing comparable to the Nobel prize winners Shockley or Mullis -- or the great inventor of Television, Philo Farnsworth -- and certainly nothing comparable to the record of Iowa State University or University of Illinois. If you look at the top 100 coders in the international coding competition at www.topcoder.com, you will see no Indians -- even though the financial prizes would be stronger incentives for Indian residents. Indians are more rare among the evident technical elite than are whites in major league basketball.

Now, the real driver here may not be entirely sound in terms of long-term business or technical excellence. Corporate managers frequently use hiring authority to fulfill personal agendas or for ego gratification unrelated to business. Slave societies provided, what in some ways was, the ultimate in ego gratification for overseers and slaveholders. Still, slave societies have poor track records of technical innovation historically. It isn't an accident that the industrial revolution happened in Britain instead of slave-holding Rome. This drive towards creating a high-tech work force with few legal rights is being driven by the same kind of instincts that created slavery -- instincts rooted in the demand for a submissive workforce even if it means sacrificing a degree of productivity or innovation. There are strong indications that the tendency towards using H-1b workers and outsourcing has resulted in lower product quality and less product innovation -- particularly among those companies most heavily using this program. Sun Microsystems for example lost 95% of its shareholders’ non-cash value from 2000 to 2003 – and they are hardly alone in this devaluation of corporate technical elites. Basically we are seeing one more replay of what happens in America when financiers, accountants and attorneys play an important managerial role in managing technical companies.

Foreign Gangs and Financial Infrastructure

I first encountered new immigrant gangs operating in critical infrastructure when I helped with an early installation of Falcon (a software system that eventually became the world's most popular credit card fraud detection system) several years ago. The fraud investigators in the bank where I worked claimed that large, organized gangs operating out of Asia and Africa, were responsible for about a third of credit card fraud in the US. These gangs had, according to these investigators, infiltrated every major bank, every major credit bureau and major law enforcement agency. What this meant in practice was that these gangs had access to the banks’ basic technical infrastructure. Part of the problem was that the entire security strategy of a typical bank was focused on protecting itself -- and much of the banks infrastructure was useful in attacking competitors (and that type of fraud was more or less ignored).

Some of these gangs, including the East Asian triads and the Nigerian fraud ring, function as a combination of political movement, religion, tribe, and criminal organization. One important factor here: these men are not criminals in their own mind -- they are acting for god, king and country. These organizations are highly kin-based which makes them very difficult to penetrate.

These fraud gangs were not terribly "high tech" in my experience. There were however many stories about these organizations successfully figuring out which bank employees were vulnerable (i.e. had a substance problem or some sexual habits that could be used for purposes of blackmail). This gives these organizations one of the prime capabilities used by various intelligence agencies to recruit low level operatives. When you combine it with the ability to monitor financial transactions on a nationwide basis, the prospects are considerable.

The Nigerian fraud ring allegedly operates formal training academies in Nigeria in which young people are taught the financial and language skills necessary to defraud US financial institutions. The “collateral” for these students’ "loans" is the welfare of their relatives. A student will be sent to the US with some appropriate supplies and contacts. If they fail to meet their quota for funds to be sent back to the US, their relatives may be tortured or killed. It wasn't clear that there was any involvement of the Nigeria Fraud Ring with Islamic terrorism. Nigeria is a member of the Organization of Islamic States and has a substantial Muslim population. At the very least, this means that the resources of the Nigeria Fraud ring are more likely to be influenced by terrorism sponsored in the Islamic world than say an a criminal organization operating out of Russia or Brazil.

Vulnerability of Foreigners in America in the Context of Terrorism

H-1b visa holders in America are in a vulnerable situation in key respects. Many are away from home and are operating in communities in which they are a distinct minority. A major factor that needs consideration is the role of India as a large country at the edge of the Islamic world. About 20% of all Indians are Islamic. The growth of Islam in India has been fueled as a means by which lower caste Indians can escape the caste system. The British colony of India was split into Muslim and Hindu countries we now know as India, Pakistan and Bangladesh. The large Muslim minority in India still has familial and linguistic ties with Muslims living in Muslim countries. If a war between Western Countries and the Muslim world develops, India faces the distinct possibility of some combination of a nasty civil war and a war with its nuclear-power neighbors Pakistan or Iran.

India with its English language schools is the source of the lion's share of H-1b's in the United States. The large Muslim minority in India and neighboring Muslim countries means quite simply that Islamic groups can do things in India that cannot be done in the US. I would suggest that there is a significant possibility of extortion being used to coerce unwilling Indian nationals in the US to cooperate with Islamic terrorist organizations. On a larger scale, India is one of the countries of the world most likely to be involved in -- or threatened by -- a nuclear exchange. As India is used more as a base for IT, the significance of a nuclear exchange involving India increases. Furthermore, the ability of Indians at home and abroad to be used in cyberwarfare increases.

Cyber Blackmail

There is the distinct possibility that various subtle forms of cyber terrorism are already at use in the United States political and social structure. The literature has described other criminal organizations like the Meyer Lansky organization getting to the point they could play a major role in projects like the growth of Las Vegas. Expertise in the area of computers only adds to possibilities in this area. Data mining techniques could help identify individuals likely to become politically prominent well in advance -- and to spot specific pools of individuals that are relatively easy to blackmail (i.e. individuals active in conservative religious organizations with tendencies to frequent prostitutes for example). A cohesive organization could capture damning evidence and make anonymous donations to elevate these people’s political careers -- specifically elevating the careers of people that are most vulnerable to blackmail and most easily controlled. Anthony Summer's “Official and Confidential, the Secret Life of J. Edgar Hoover” alleges such actions were conducted by the Meyer Lansky organization and its allies around the elevation of J. Edgar Hoover to head of the FBI. The technology of today makes such blackmail much, much easier to be widespread.

Even if a major political figure is "clean" it is quite possible some relative has a weakness that can be identified and used. Someone with access to credit card data could for example find children of politicians that were making ATM withdrawals in neighborhoods associated with the drug trade. Such information might be used to disrupt the life of an opponent by timing the arrest of a family member when pressure needed to be applied in a political campaign. The son of a former mayor of Park Forest, Illinois told me that illegal wiretaps were used against his family this way 25 years ago. Modern technology makes such activities far easier and less expensive. It is rather likely at this point that most political figures at the national level are carefully watched by forces intent on manipulating the US political system, as are watched these politician's relatives and major contributors.

Sabotage

In Operation Desert Storm, one of the most effective actions of the war involved use of a "back door" into the US made Iraqi phone system. I suspect one of the items high on Saddam Hussein's "to do" list was purchase of a phone system from another country that wasn't an ally of the US (which specifically means China). The US recently prepared an invading force of hundreds of thousands of military personal. The logistics in such an undertaking is quite substantial. The big question here: how would substantial disruption of the US rail, telephone and financial infrastructure affect such a war effort? What would be the affect on troops in the field and their ability to fight?

The key infrastructure that is now under the influence of foreign nationals in the US could mean that telecommunications, rail transport, insurance and banking services could be disrupted on a mass scale. Such an operation might be conducted for a few tens of millions of dollars. It would involve a combination of:

· Extortion of the families of recent immigrants at home

· Bribery of people that have been in the US only a little time, have little real attachment to the US or its peoples and may find themselves in a rather precarious position given the nature of the current economy.

Furthermore, once it becomes obvious that a backlash is inevitable, it will become easier to convince more foreign nationals that they have no long-term future in America and might as well cash out while they can.

The telecommunications infrastructure has been disrupted before due to "bugs" in its software. In normal circumstances, there is always a "backup" to which someone can go if something goes wrong. We now have a situation in which much of this critical infrastructure has been in the direct control of foreign nations for quite some time now. In some cases there may no longer exist any of the software necessary to run these key systems that hasn't been subtly sabotaged. One form such sabotage might take is embedding various bugs (say buffer overflows) that occur in very specific circumstances that can be controlled by an outside agency. What this would mean in the case of the telecommunications system for example is that the current version may have an exploit that can shut it down -- and each other version that can be rolled back to is also somehow vulnerable in a different way.

Similarly, the actual technical infrastructure in banks and insurance is frequently under the direct control of foreign nationals. Various security measures are in place to prevent outsiders from manipulating the system. Still, at a certain level, security comes down to which individuals are trusted with things like archival backups of software and data. Increasingly, those people are foreign nationals. The major security thrust of every bank is protecting itself from monetary fraud. Much less effort is invested in preventing bank resources from being used to defraud other banks or to be used for criminal purposes, such as extortion.

The banking, insurance, transportation and telecommunications infrastructure could all literally be shut down by proper application of bribery, extortion and selective use of terror. The type of disruption I'm thinking of here could mean that it becomes very difficult for key items to be manufactured and transported in the US for a matter of months. This tactic would be most effective if it could be conducted in such a way that various essentials were simply not available for ready transport to the Iraqi invasion force for example -- or disruption at home were so great that this disruption overshadowed anything going on in the Middle East.

What Drove This?

The growth of H-1b wasn't obviously a great conspiracy. There may have been some conspiracies involved here and there, but the greater picture was something else. The illegal immigration and the H-1b program both offered American business elites a pool of docile computer professionals. It has been a great embarrassment, for example, that the greatest competitor Microsoft, with its incredible resources, is Linux -- an OS that isn't really created by a company at all and was conceived by renegade, almost counter-cultural engineers. A knee-jerk answer to this culture of renegade technologists was expansion of H-1b and off-shore outsourcing.

The reliance upon this pool of indentured technicians has subtly colored the decision making process of some of the most financially influential people in America. People tend to identify with the people that surround them. The simple fact is that Wall Street is far from a cross section of the American public, so the decisions being made there can't be expected to benefit the public as a whole. The H-1b program has made Wall Street and other centers of authority even more different from the general American public than they were 20-30 years ago—and the decisions made in these centers of authority are even more divorced from concern for the American public than they were then.

Control of communications infrastructure has been the key to various financial games for a long time. Today, though, the stakes are much, much higher. We aren't talking about the future of the US or the west here -- but of the entire world -- such is the role that the financial centers of the US have taken on since WW II. What kinds of things are people willing to do for those kinds of stakes? Will they blackmail for it? Will they invade privacy for it? Will they manipulate political systems for it? The answer is obviously yes to all of these.

How Do We Get Out?

I'm specifically trying to avoid blaming H-1b visa holders and foreign workers for the problems here. I think it was a very bad idea for H-1b to be used extensively in technical areas in the US—and H-1b and L1 visa holders should be sent home as humanely as possible.. In the event that some of the ways the H-1b visa program has contributed to security problems come to light, H-1b visa holders and their co-nationals may be used as scapegoats -- particularly if the US experiences a significant military defeat worse than Viet Nam. Indians in the US are a highly visible minority with their own distinct culture. A lot of folks are already very, very resentful of the economic deprivation they have experienced that accompanied the influx of Indians to America. Jews weren't the only group involved in Germany defeat in WW I -- but they were a group that was highly visible and became useful to various interests as a scapegoat when something big enough had happened that it became necessary to manufacture a scapegoat.

It is my opinion that serious investigation needs to be done on how the H-1b visa program was expanded, the role of foreign political funding, the interests involved in the creation of that program and the level of H-1b fraud. It is my opinion, we are talking criminal, fraudulent and treasonous behavior far, far larger than Enron. We need a serious house cleaning in upper management in corporate America and in congress. Unfortunately, it will be difficult to keep this from becoming a "witch hunt".

I also think that bonding of H-1b visa holders needs to dramatically increase. H1-b workers can leave their employment at any time. However, little provision is made for resettling and adjustment of an H-1b holder than has had to return to his country, at his judgment, for reasons of employer non-compliance with terms of his agreement; or if the H-1b worker reports their employer for illegal activities. This needs to change. All programs of legal visas need to become self-funding and self-insuring. This means that substantial additional fees should be applied to handle for example the cost of 9/11/2001. If there is a decision to make substantial curtailment of H-1b visas, companies sponsoring those visas should be required to give compensation to the H-1b visa holders. I'm concerned about bonding first, because this is something that can be done gradually. If there is to be a mass expulsion of H-1b visa holders, or it becomes clear that these visas will not be renewed or converted to green cards, that is a time I expect a reaction among the H-1b community is likely. That reaction is likely to take the form of exploiting their actual, physical control of key aspects of technical and financial infrastructure. The US doesn't have an ideal choice here: expulsion of H-1b's -- or even curtailment of the program is likely to produce a reaction -- at the same time a continuation of the program is likely to dig even deeper in their hole the US government and corporate elites.

I think we also need to publicize this issue enough that folks in positions of power in government and major corporations can be held accountable for criminal actions of reckless endangerment of public safety if the events about which I'm speculating here come to pass. Unfortunately, I doubt there will be much in the way of reaction until something catastrophic happens -- a domestic terrorist incident larger than 9/11/2001 or a major military embarrassment greater than Viet Nam. In the current situation, the technical elite of the US is rather alienated from the corporate managers with which they once strongly trusted and identified. This may mean that if there is a sudden attempt to return to use of US technical talent, we will see major dissent from that community as their skills are relied upon again.

Implications of De-Globalization

The H-1b program was driven by assumptions and values that are “common sense” among political and economic elites -- that are not shared by US citizens in general. The wind-down of H-1b will quite likely cause a re-examination of immigration and trade policies that is long overdue. This is especially important because the US has been the market driving economic growth in much of the world for some years now. There are serious dangerous in what it may mean if that market is cut off from some major world economies. For example, it is likely that some of the affected countries may turn to alternative markets -- especially in the world arms trade. The aftermath could be serious global destabilization.

Some of these effects might be mitigated if the H-1b program were carefully cut back. Measures might include mandatory generous resettlement allowances paid by employers or clients of H-1b workers. It may also be much less divisive and controversial if criminal investigations in this area are focused on US citizens rather than the vulnerable H-1b workers.

Copyright 2003, Randall J. Burns www.outlander.com

You may distribute this document freely in its entirety and with attribution.