Falun Gong, Steve Bannon And The Trump-Era Battle Over Internet Freedom

Of all the disruptions unleashed by the Trump White House on how the federal government typically works, the saga of one small project, called the Open Technology Fund, stands out.

The fantastical tale incorporates the spiritual movement Falun Gong, former White House strategist Steve Bannon, the daughter of a late liberal congressman and a zealous appointee of former President Donald Trump.

And specifically, it involves a fierce, months-long battle over whether the U.S. Agency for Global Media and the U.S. State Department should subsidize software developed by adherents of Falun Gong. The decision to prioritize this software stripped money intended for critical apps from a federal fund designed to bolster technology vital to dissidents overseas, officials say. On top of that, once approved for funding, over a six-month period the software served a grand total of four people. That's right, four.

The whole fight was, in short, bananas.

Yet the consequences were serious. Executives lost their jobs. The U.S. government froze nearly $20 million in funds for other tech projects that helped democracy advocates evade authoritarian regimes.

"Any time a journalist or human rights defender — whether they're in China or Iran or Russia — picks up one of our technologies, we know and they know that they are being protected as best as they possibly can," says Laura Cunningham, who was fired as president of the Open Technology Fund under Trump and then restored to her position. "To push OTF to reduce those standards around security and effectiveness? It's not just watering down or pushing aside laws and regulations. It is literally putting people's lives in jeopardy."

The State Department's inspector general has been investigating a whistleblower's allegations — first being made public by NPR in this story — that the concerted effort to divert funds to the Falun Gong software Ultrasurf was a criminal conspiracy.

The pressure campaign begins

There is a technology arms race between repressive governments seeking to clamp down on free expression and people seeking to evade such restrictions without leaving fingerprints.

Adherents of Falun Gong first developed Ultrasurf nearly two decades ago to get around censors in China and elsewhere. Early on, Ultrasurf seemed a highly promising tool in aiding activists and journalists to talk securely online. It earlier received development money from the State Department and the predecessor agency to USAGM.

In the U.S., Falun Gong practitioners have put on colorful cultural festivals and mass meditations. They've also proselytized its beliefs, which largely focus on the powers of meditation but can be extreme. Some teachings condemn "homosexual conduct," alcohol, smoking, and sex outside marriage.

Chinese authorities first banned Falun Gong more than two decades ago. They have called it a cult and sought to restrict its influence in other countries; advocacy groups such as Freedom House and Human Rights Watch have documented the persecution.

The group's profile rose sharply in the U.S. during the Trump era. People with close ties to the Falun Gong own The Epoch Times, which has promoted pro-Trump conspiracy theories in its pages and in videos posted to Facebook and YouTube. Falun Gong provided ballast for Trump's rhetoric against China.

Yet its Ultrasurf software appealed to some advocates on the left and right. Among the strongest proponents for federal funding are Katrina Lantos Swett, the daughter of the late Rep. Tom Lantos, a liberal Democrat, and the conservative activist Michael Horowitz, the former director of the Project for International Religious Liberty at the right-of-center Hudson Institute.

Swett serves as the head of the human rights foundation named after her father, who survived the Holocaust as a child and went on to represent California in the House, leading the House Foreign Affairs Committee in his final years. In October 2019, Swett argued that Congress should require the U.S. Agency for Global Media to devote $25 million to so-called firewall-circumvention technology.

"The United States has a momentous opportunity to send a strong message condemning censorship and digital authoritarianism by supporting proven large-scale circumvention tools," Swett wrote in the fall of 2019. "With clear Congressional leadership and direction, we hope that the new leadership at the USAGM will again engage in funding long proven tools that can provide Internet access to millions of users in closed societies every day."

Among the few software platforms she cited: Ultrasurf.

Ultrasurf's secrecy made fund officials wary

Programs with similar ambitions have been funded through the Open Technology Fund. The fund originally sat under USAGM as a division of Radio Free Asia. In September 2019, it was spun off with the blessing of a senior Trump budget official and key lawmakers. It is now an independent nonprofit organization yet remains wholly dependent on the U.S. government for funding.

The fund helped incubate the development of Tor technology, the secure messaging platform Signal and the tech that undergirds Facebook, Skype and WhatsApp. It seeks to aid private communications. And these platforms also enable people to surreptitiously consume news coverage and programs from the international broadcasters under USAGM, including Radio Free Asia and Voice of America.

The tools are particularly important in such countries as Russia, China, Iran and Cuba. And they have served to protect protest organizers in Belarus, Hong Kong and Myanmar in the middle of brutal government crackdowns.

One problem for Ultrasurf: OTF predominantly subsidizes the development and distribution of software code that is considered open source. Among other things, that means it can be reviewed by outside software engineers to determine if there are either unintended vulnerabilities or intentional back doors that would allow hostile regimes in.

Ultrasurf was closed code. And its creators and owners had fought repeatedly against lifting the veil.

Regardless, its champions dug in.

Swett had an ally in Trump's pick to lead USAGM: Michael Pack, a conservative documentarian whose nomination had languished for nearly two years in the Senate until the spring of 2020.

"Very close to Michael Pack"

In mid-March of last year, Pack's nomination started to gain momentum. Swett called Libby Liu and Laura Cunningham, then the Open Technology Fund's CEO and president, respectively. With an aide on the line, Swett demanded that they fund Ultrasurf. She boasted that she was "very close to Michael Pack and his sherpa," according to contemporaneous notes of the call obtained by NPR. (The aides assigned to help presidential appointees through the nomination process are often called Sherpas.)

The two OTF executives noted that Ultrasurf's backers had never applied to receive any money from the fund through a competitive process, a process required by law. They said they welcomed a submission. None came.

Six weeks later, Swett published a piece in The Hill castigating USAGM and OTF: "Unfortunately, they have withheld sufficient funding from these technologies for nearly a decade," she wrote.

Swett declined NPR's request for comment. A spokeswoman said the foundation supported an "all hands on deck" approach and saw the agency as an ally, even if they disagreed on strategy.

Pack's prospects had accelerated once the White House launched an attack on the Voice of America for its coverage of the coronavirus outbreak in China. Bannon, who had advised Trump during the 2016 presidential campaign and in the White House, told The Washington Post he had pushed for Pack because VOA and its sister networks should be "on point" with Trump's foreign policy, especially his hard-line tack against the Chinese communist regime.

"He's my guy," Bannon said of Pack, with whom he had worked on two documentaries years earlier. He told Vox, "Pack's over there to clean house."

In early June, as the Senate confirmed Pack, USAGM senior staffer Joan Mower called an employee at the State Department to flag concerns about the OTF, saying it was "created illegally" and "wasn't funding the important tools, like Ultrasurf," according to a contemporaneous account shared by the State Department employee with colleagues. She also warned that Liu's tenure would be cut short and that the Trump White House wouldn't allow the fund to pay for the programs it intended to subsidize. (NPR reviewed the contemporaneous account and spoke with four people who said they heard of it at the time. Mower says she doesn't recall that conversation.)

On June 13, Michael Horowitz took to Bannon's online radio show to demand Pack dump Liu: "He's got to fire her! Quickly!"

Liu announced in a letter that she would be stepping down, effective in July, seeking, as she later put it to NPR, "to deflect heat" from other executives.

It didn't work. Pack fired Liu, Cunningham and the chiefs of Radio Free Europe, Radio Free Asia and the rest, along with a senior adviser, Steve Capus, who is a former president of NBC News. (VOA's top two officials resigned as Pack was taking office.)

Veteran staffers sidelined in push for Ultrasurf funding

And the push for Ultrasurf funding proved relentless. Pack sidelined and suspended a cadre of top USAGM executives, accusing them of grave lapses. Among them were the general counsel, the chief strategy officer and the chief financial officer, who had warned him it could be illegal to divert money to Ultrasurf without going through proper application and review processes. (Pack has not responded to NPR's requests for comment for this and related stories.)

In late June, André Mendes, appointed by Pack as the agency's chief operating officer, took part in a meeting at the Eisenhower Executive Office Building, right next to the White House. According to the whistleblower complaint by a State Department staffer, Mendes brought up old battles over Ultrasurf. He told the various national security officials present that the State Department had not continued funding Ultrasurf because it did not want to offend Chinese officials, given its roots in Falun Gong.

Mendes then said, according to the whistleblower complaint, that USAGM had "gotten rid of some people" and that decisions on which Internet freedom initiatives would be funded would be made "less ideologically." He made the case that religious groups needed to play a greater role, according to the whistleblower, clearly referring to Ultrasurf. NPR obtained the complaint from a congressional source and verified it with the whistleblower's attorney.

Mendes rejects this account. "Those statements are inaccurate and misquote me," Mendes wrote to NPR. "The Lantos [F]oundation understood the dynamics of the lack of pragmatism on the part of the people that fought so hard to defund [Ultrasurf] despite its success. Alas, they were smeared by that machine."

An audit affirms doubts

The State Department also funds digital efforts to circumvent the "Great Firewall of China" and other authoritarian efforts to clamp down on free speech. An initial security audit of Ultrasurf commissioned by the State Department, however, reflected significant problems with the software, which was still relying on technologies that were considered cutting edge in 2013. The audit, conducted late last spring and reviewed by NPR, concluded that "censoring Ultrasurf nation-wide would have been trivial for a moderate-budget adversary." It said a "complete and fundamental redesign" would be needed to guarantee that hostile forces could not readily shut it down.

Robert Destro, assistant secretary of state for democracy, human rights and labor under Trump, says he was aware of the audit. Nonetheless, he says, people in the field in the Middle East and Asia told him Ultrasurf was effective.

"I don't know what the empirical [value of the software] is," Destro tells NPR. "Was I supportive of the Falun Gong? Was I supportive of Ultrasurf? Yeah. But that wasn't my job. My job was to oversee Internet freedom, and if they fit into them, that's great."

Later on, the Lantos Foundation's Swett emailed to ask Destro pointed questions about the Ultrasurf audit, though none of it was public, according to email exchanges attached to the whistleblower complaint. Destro then asked several colleagues to find out where the problems were so they could "cut the knot."

The whistleblower charges that this was an inappropriate intervention from a senior State Department official in the formal evaluation of whether Ultrasurf should qualify to receive federal funds.

"What we've seen with the treatment of Ultrasurf over the last year really is pretty shocking," says Whistleblower Aid founder John Tye, who represents the official. "It's an effort by lobbyists with close ties to the Trump administration to really reroute human rights funding and policy away from proven technologies ... toward tools that really just check a box in terms of close ties to religious movements."

Former U.S. Secretary of State Mike Pompeo, who left office with Trump, made funding religious groups a hallmark of his tenure. He declined a request for comment for this story. Destro tells NPR he simply wanted to make sure everyone had trust in the process.

"Why is there so much thunder and lightning about Ultrasurf?" Destro asks. "It was always very curious. What was this fight about? And to be honest with you, some of it, I think, has to do with the fact that it came out of the Falun Gong movement."

Upheaval at the Open Technology Fund under Pack

In July, Pack announced he would appoint a new chief for the Open Technology Fund, James Miles. Miles, a Republican lawyer who had served as South Carolina's secretary of state, had no experience in Internet freedom and had been accused by the Federal Trade Commission of participating in "an allegedly illegal pyramid scheme." He had, however, issued an official "Certificate of Appreciation" to Falun Gong while in office in South Carolina, according to a reproduction of the certificate on a website run by the spiritual movement. Miles did not respond to NPR's message to his private email account seeking comment.

A federal appeals court ruled later that month that Pack had overstepped his authority in dismissing and replacing OTF's corporate board, which had to approve the dismissals of Liu and Cunningham. As Liu had resigned, Cunningham was restored to run the operation. Pack moved Miles to a revived Office of Internet Freedom within the CEO's office at USAGM.

Late that month, Pack gave an interview to an Epoch Times reporter, who asked him about Ultrasurf. "China's internet firewall is like the Berlin Wall: It has to come down," Pack told the paper, which said Pack did not specify what tools he sought to use.

Behind the scenes, however, Pack sought to move the funds toward Ultrasurf. In August, the agency's deputy chief financial officer resigned rather than approve directing money to the program.

And the Open Technology Fund found itself stymied. Pack would ultimately tie up more than $19 million. He took over more than 80% of the activity subsidized by the fund and additional money from Radio Free Asia. And he had USAGM pay a powerful Richmond, Va., law firm with strong Republican ties more than $1 million to investigate the executives he sought to fire as well as OTF's activities.

Dissidents in Danger

A PBS NewsHour report compiled some examples of the harm done.

"I have had to distance myself from my family quite a bit to increase their safety," Iranian-born democracy activist Nima Fatemi told NewsHour. His software, Kandoo, is designed to protect protesters against the regime. It lost its funding from OTF after Pack took control. "Secure communication is the step zero of any change in any society," he said.

In October, a D.C. Superior Court judge found that Pack had overstepped his bounds.

Still, under Pack, USAGM awarded Ultrasurf $1.8 million but paid out only $249,000 late in the year. Officials say that this was because that was the only money his aides could flush out for it.

By then, Joe Biden had won the presidential election. And Pack was fighting a rearguard action, aware that Biden would want to replace him.

In mid-December, Pack moved to "debar" the Open Technology Fund, which would block it from receiving funds not only from the U.S. Agency for Global Media but also from any other arm of the federal government for three years.

Two days before Biden's inauguration, Pack moved to appoint new board members for the networks his agency oversees. Among the appointees: the writer Roger L. Simon, who is a columnist for The Epoch Times. Just days earlier, Simon wrote that he believed the Jan. 6 siege of Capitol Hill, inspired by then-President Trump, was a "false flag operation" by forces seeking to discredit Trump.

Just hours after Biden took the oath of office, Pack resigned at the new president's behest. The new administration invited most of the officials who were dismissed or suspended by Pack back to the agency and dismissed many of his appointees. New USAGM officials have promised to restore funding to OTF.

During his nearly eight months in office, Pack reserved nearly all of his media interviews for friendly conservative or right-leaning outfits. One of his final ones, in late December, was a video interview with The Epoch Times. Once again, The Epoch Times interviewer asked about Ultrasurf.

"I find it odd that they weren't funded," Pack said. "This spin-off agency of ours, a separate grantee called the Open Technology Fund, in its very name, they are self-limiting. I can't figure it out."

"There's no reason not to fund it."

As of late last year, Pack and other former USAGM officials were facing a formal criminal inquiry over the whole issue — the Open Technology Fund, Ultrasurf, the firings, all of it. On Wednesday, a powerful senior Democratic senator, Ron Wyden of Oregon, sent a letter pressing the inspector general's office on its findings. (Former OTF CEO Libby Liu filed her own whistleblower complaint in September.) The State Department whistleblower's attorneys asked the Justice Department to open a formal criminal inquiry as well. And the new leadership at USAGM has also referred Pack's related actions to the inspector general.

In February, an official with Voice of America sought to see how useful Ultrasurf had proved during the period it was supported by the agency. He ran a review to see how many people used Ultrasurf to access Voice of America and Radio Free Asia's services, one of the reasons OTF subsidizes such software. Two people did in December; another two did in January.

"We spent nearly two weeks checking and double-checking how the number could possibly be this low," Matthew Baise, the director of digital strategy and audience development for Voice of America, wrote in an email to his bosses on Feb. 19 that was obtained by NPR.

"We believe the true, final number of measurable traffic from Ultrasurf to be so miniscule because a) none of the networks were ever notified of its existence so it was never promoted b) it's only available for Windows desktop machines (almost all our audience is on mobile devices) and c) it is a brand new product," Baise wrote. "In the absence of promotion on Ultrasurf's end, this thing was essentially invisible."

Disclosure: This story was reported by NPR media correspondent David Folkenflik and edited by NPR media and technology editor Emily Kopp. Because of NPR CEO John Lansing's prior role as CEO of the U.S. Agency for Global Media, no senior news executive or corporate executive at NPR reviewed this story before it was published. [Copyright 2021 NPR]