Rick Scott Profitably Aided Oppressive Regimes

May 12, 2009 12:46 pm ET

Disgraced Columbia/HCA executive Richard L. "Rick" Scott has been in the media lately for spearheading Conservatives for Patients Rights, an organization adamantly opposed to health care reform.  In addition to the fraudulent practices of his former empire, Scott serves on the boards of two companies that helped the Saudi Arabian and Iranian regimes suppress their citizens by censoring access to the Internet.

Rick Scott Is Personally Funding Conservatives For Patients Rights

Rick Scott Used His Own Funds To Start The Group Conservatives For Patients Rights.  During an interview with the Politico, Rick Scott was asked if he was "providing the only source of funding" for the group, to which he said: "I started by myself, but people have started funding. I did it myself at the beginning because it is what I believe, and I think it is hard to get people to ever ... do something with you if you don't stick your own neck out. So that is what I did, and now I have a lot of support." When asked "who else is funding the organization?" Scott answered: "I told people I am not disclosing their names. But there are lots of people who believe the same way we do." [Politico, 4/21/09]

CyberGuard, 2001-2006

February 2001 - January 2006: Richard L. Scott Served On CyberGuard's Board Of Directors. 

February 2001: Richard L. Scott Joined CyberGuard's Board Of Directors.  According to the Secure Computing website, Richard L. Scott joined CyberGuard's Board of Directors in February 2001. [SecureComputing.com, accessed 4/8/09]

  • Various Reports Of The Length Of Scott's Tenure On CyberGuard Board Have Conflicting Dates. The Secure Computing (now McAfee website) reports that Scott left the CyberGuard Board in March of 2003. However, Business Wire twice reported that Scott was on the CyberGuard Board during the Secure Computing merger in January 2006. [SecureComputing.com, accessed 4/8/09; Business Wire, 8/18/05; Business Wire, 1/11/06, via TheFreeLibrary.com]
  • Scott Served On CyberGuard Board From April 2004 Through January 2006. According to Enterpriser.in, a business site in India, "Scott, who was a board member of CyberGuard Corporation from April 2004 to Secure's acquisition of CyberGuard in January 2006." [Enterpriser.in, accessed 5/11/09]

In 2003, Scott Owned 45% Of Cyberguard. The Nashville Post reported: "Scott also has deployed funds to CyberGuard Corp., a Ft. Lauderdale computer security firm. He controls a 45% stake worth almost $50 million." [Nashville Post, 2/1/03]

  • Scott Owned A Controlling Interest Of CyberGuard Stock. According to a CyberGuard SEC report filed in July 2004 because of the amount of stock owned by him, "Mr. Scott may be able control the outcome of certain shareholder votes, including votes concerning the election of directors, the adoption or amendment of provisions in our Articles of Incorporation, and the approval of mergers and other significant corporate transactions. This level of concentrated ownership by one person may have the effect of delaying or preventing a change in the management or voting control of CyberGuard." [CyberGuard SEC Filing, 7/7/04]

By 2006, Scott Was CyberGuard's Largest Shareholder.  Business Wire reported: "Richard L. Scott, CyberGuard board member and largest shareholder said, 'When I initially made my investments in CyberGuard, I felt CyberGuard had superior products in the firewall industry. What was accomplished over the last 5 years is a testament to the management team we put in place and their commitment and focus." [Business Wire, 1/11/06, via TheFreeLibrary.com]

Clientele During Scott's Tenure On Board Of Directors

CyberGuard's Clients Included Saudi Arabian And U.S. National Banking, As Well As The U.S. Department Of Defense.  According to Business Wire, CyberGuard has had "security projects in the Asian ISP/ASP markets, Saudi Arabia's National Banking System and in the US on the DOD Satellite Data Project." [Business Wire, 4/5/01]

October 2002: CyberGuard Announced Six-Month Saudi Security Contract.  The Miami Herald reported: "Cyberguard, the Fort Lauderdale computer network security firm, reported net income of $931,000 for its first fiscal quarter ended Sept. 30, reversing a loss of $908,000 a year ago...Last week, CyberGuard said it would be providing security for the Saudi Telecom Co., the only communications provider in the Kingdom of Saudi Arabia. The contract with CyberGuard is part of a large data network security project embarked upon by the Saudi company. CyberGuard, which didn't disclose the value of the contract, says the work will last about six months." [Miami Herald, 10/28/02, emphasis added]

  • Saudi Telecom Sought To Provide Secure Technology To Its Consumers. Business Wire reported that "Saudi Telecom is a company delivering results for its customers as it evolves to cope with the competition it progressively faces as its traditional markets are liberalized...Saudi Telecom understands that its leading edge network technology (Optical Fiber & ATM backbone), in data, telephone and mobile, and a focus on customer needs is not the end of the story; it also needs a secure business environment where vital information is safeguarded." [Business Wire, 10/22/02]

December 2002: CyberGuard Provided Data Security For Saudi Company.  Communications News reported that "CyberGuard Corp., Ft. Lauderdale, FL, will provide firewall/VPN appliances to secure the network infrastructure for the Saudi Telecom's data network security project in Saudi Arabia." [Communications News, 12/2002]

The Saudi Government Utilized CyberGuard's Software To Protect The Banking System. According to an M2 Presswire release, "the Saudi Arabian Monetary Agency (SAMA) has selected CyberGuard's premium firewall/VPN appliances to provide the information security for a new ATM network called the SADAD Project being established in the Kingdom of Saudi Arabia. SADAD is a nationwide network that will allow citizens throughout the Kingdom to pay utility, phone and other bills securely at ATM machines. The project is a collaboration between all the banks in Saudi Arabia under the sponsorship and supervision of the SAMA." [M2 Presswire, 7/29/04, accessed via Goliath.ecnext.com]

CyberGuard Has Several Saudi Clients.  According to an M2 Presswire release, "CyberGuard provides information security solutions throughout the Middle East, particularly within the Kingdom of Saudi Arabia. In 2002, Saudi Telecom Corp selected - and began deploying - CyberGuard firewall/VPN appliances in high availability configurations to secure their critical customer and consumer backbone networks. Other large CyberGuard customers include Saudi Arabian Airlines, the National Commercial Bank (NCB) in Jeddah, as well as other banks and government agencies in Riyadh." [M2 Presswire, 7/29/04, accessed via Goliath.ecnext.com]

CyberGuard - Secure Computing Merger

Secure Computing Purchased CyberGuard "For About $295 Million."  Computer World reported: "Secure Computing Corp. said it has reached an agreement to acquire CyberGuard Corp. for about $295 million in cash and stock." [ComputerWorld.com, 8/19/05]

CyberGuard's Largest Shareholder, Rick Scott, Joined "Secure Computing's Board Of Directors Following The Close" Of The Merger.  Business Wire reported: "Richard L. Scott, CyberGuard board member and largest shareholder said, '...Their acquisition of technology and vision for combining these technologies, we believe, will be a significant benefit to all of the combined shareholders of CyberGuard and Secure Computing. I am very proud of what has been accomplished and the team that have been acquired by Secure Computing.' Mr. Scott will join Secure Computing's Board of Directors following the close of the transaction." [Business Wire, 1/11/06, via TheFreeLibrary.com]

CyberGuard Stockholders Received Stock And Cash Windfall In Merger Agreement.  The Miami Herald reported: "Secure Computing has agreed to buy CyberGuard in a deal valued at $295 million, based on Secure's closing price of $12.18 Wednesday. The stock closed Friday at $11.18. [...] CyberGuard stockholders will receive a half share of Secure stock and $2.73 for each CyberGuard share. The company yesterday reported revenues for the fiscal year ended June 30 spiked 38 percent over last year, to $66.1 million. Earnings per share decreased to 3 cents from 7 cents in fiscal 2004. Among CyberGuard's shareholders and directors are Broward County Sheriff Ken Jenne and lobbyist William Rubin." [Miami Herald, 8/20/05, emphasis added]

  • Prior To Merger, Scott Purchased Nearly 6,500 Shares Of CyberGuard Stock. Business Wire published a RealTimeInsider.com report indicating that "Richard L. Scott, Director of Cyberguard Corp. (NASDAQ:CGFW), purchased a total of 6,478 shares at an average price of $5.96. The total purchase price was $38,639.97. Based on the Form-4 Filing, this appears to be an open market purchase and there were no footnotes or special circumstances described in the filing." [Business Wire, 2/7/05]

Under Scott, CyberGuard Previously Attempted To Absorb Secure Computing In July 2004

July 2004: CyberGuard Attempted To Acquire Secure Computing For $297 Million.  The South Florida Sun-Sentinel reported that CyberGuard "made a $ 297 million bid to buy rival Secure Computing Corp....Both CyberGuard and Secure specialize in helping business and government customers with information technology security issues. In a letter sent to Secure on Sunday, CyberGuard proposed a one-for-one stock trade...The final price will have to be negotiated if Secure agrees to the deal. Layoffs could occur at the combined company if the deal goes through." [South Florida Sun-Sentinel, 7/13/04]

  • In 2004, Secure Computing Was Reportedly Providing Iran With Censorship Software. Information Week reported: "In a report released earlier this year, [Open Net Initiative] stated that Iran used software from Secure Computing, based in San Jose, Calif. to operate 'one of the world's most substantial censorship regimes' in 2004 and 2005." [Information Week, 10/14/05]

Secure Computing, January 2006 - November 2008

Richard L. Scott Joined Secure Computing Board As Part Of Merger Agreement.  According to Business Wire in August of 2005, Secure Computing acquired CyberGuard and "in conjunction with this acquisition, Richard L. Scott, a current member of CyberGuard's board of directors, will join Secure Computing's board of directors following the close of the transaction." [Business Wire, 8/18/05]

  • January 2006: Richard L. Scott Joined Secure Computing's Board Of Directors. According to the Secure Computing website, Richard L. Scott serves on its Board of Directors. "Richard L. Scott joined Secure Computing Corporation's board of directors in January 2006." [SecureComputing.com, accessed 4/8/09]

Richard Scott Became A Member Of Secure Computing's Board Through The CyberGuard Acquisition.  Market Wire reported: "Richard Scott, who has been a Secure board member since January 2006, was appointed as Secure's Chairman of the Board. Mr. Scott, who was a board member of CyberGuard Corporation from April 2004 to Secure's acquisition of CyberGuard in January 2006, is currently Chairman and Chief Executive Officer of Richard L. Scott Investments, LLC, a private investment company." [Market Wire, via FindArticles.com, 4/08]

Scott Also Served As Chairman Of The Board At Secure Computing.  According to Enterpriser.in, a business site in India, "Richard Scott, who has been the company's board member since January 2006, was appointed as the Board's chairman." [Enterpriser.in, accessed 5/11/09]

Scott Was Paid At Least $70,000 During His Time On Secure Computing Board

  • 2006: As A Director, Scott Received $35,000 For Serving On Secure Computing's Board Of Directors. According to SEC filings, "each Outside Director receives an annual stipend. In 2006, the annual stipend was $35,000." [Hoovers.com, 3/26/07]
  • 2007: As A Director, Scott Received $35,000 For Serving On Secure Computing's Board Of Directors. According SEC filings, "each Outside Director receives an annual stipend. In 2007, the annual stipend was $35,000." [Hoovers.com, 4/3/08]

Scott Left Secure Computing Board In November 2008.  According to a November 2008 SEC filing: "Pursuant to the terms of the Merger Agreement [between Secure Computing and McAfee, Inc.], upon the effectiveness of the Merger on November 18, 2008, Messrs. Dan Ryan, John McNulty, Robert J. Frankenberg, Stephen M. Puricelli, Alexander Zakupowsky, Jr, Cary J. Davis and Richard L. Scott no longer serve on the board of directors of Secure Computing. The newly appointed board of directors of Secure Computing is comprised of certain officers of McAfee." [Secure Computing SEC Filing, 11/18/08]

Secure Computing Continued To Contract With Saudi Arabia, UAE, Oman, Sudan And Other Countries That Censor Their Citizens After Scott Joined Board Of Directors

SmartFilter Used By Saudi Arabia, UAE, Oman, Sudan, And Tunisia.  According to the International Herald Tribune, when censoring the internet, "Middle Eastern countries pay more attention to international news, with Iran blocking the BBC's site. Saudi Arabia focuses on censoring social content like pornography and gambling, though it also restricts political sites critical of the Saudi monarchy or non-Sunni Islam sites...One of the more popular software tools is SmartFilter, a product of Secure Computing in San Jose, California, which is used by Saudi Arabia, the United Arab Emirates, Oman, Sudan and Tunisia." [International Herald Tribune, 5/18/07, via CitizenLab.org, emphasis added]

The UAE Used Secure Computing Software To Filter Internet Content.  According to ITP.net, "[t]he UAE not only blocks content that is religiously, culturally and socially inappropriate, but also filters political content...The software SmartFilter, from the US-based firm Secure Computing, is used to filter content from specified categories outside the free zones in the UAE. According to the report, the UAE does not just '...extensively block targeted content but they also unnecessarily overblock unrelated content.'" [ITP.net, 10/6/08]

SmartFilter Used By "Kuwait, Oman, Saudi Arabia, Sudan, Tunisia And The United Arab Emirates."  According to an op-ed published by the International Herald Tribune: "Government-controlled Internet providers were using SmartFilter to effectively block access for entire countries.  Secure Computing refused to provide me with a list of the governments that use its filters. However, the OpenNet Initiative...found that SmartFilter has been used by government-controlled monopoly providers in Kuwait, Oman, Saudi Arabia, Sudan, Tunisia and the United Arab Emirates." [International Herald Tribune op-ed, 3/10/06, via Factiva]

SmartFilter "Used By State-Controlled Providers In Iran" Even Though It Is Illegal For American Companies To Market Their Products There.  According to an op-ed published by the International Herald Tribune: SmartFilter "has also been used by state-controlled providers in Iran, even though American companies are banned from selling technology products there. (Secure Computing denies selling products or updates to Iran, which is probably using pirated versions.)" [International Herald Tribune op-ed, 3/10/06, via Factiva, parentheses original]

Secure Computing Contracted Discounted Software To The Saudi Arabian Government

Secure Computing Software Used In Saudi Arabia As Well As Iran.  Jonathan Zittrain, co-director of Harvard Law School's Berkman Center for Internet and Society, a group that contributed to the report leading to the BBC report, said: "But the fact remains that the software has been in use for an extended period of time [in Iran]. And we've seen Secure Computing software turn up in more than just Iran. We've seen it in Saudi Arabia as well." [BBC.co.uk, 6/24/05]

Saudi Arabian Internet "Censorship Is Considered Among The Most Restrictive In The World." In an article stating that Saudi Arabian Internet "censorship is considered among the most restrictive in the world," BusinessWeek reported that the country's Communications & Information Technology Commission (CITC) "uses more sophisticated software from San Jose-based Secure Computing that offers a menu of 90 categories of sites to block." [BusinessWeek, 11/13/08]

Secure Computing Offered The Saudi Arabian Government A Discount To Use Their Software.  According to the New York Times, "in Saudi Arabia, the government spent two years designing a centralized control system before gingerly opening the spigot to the Internet in February 1999. At the time, the government selected Secure Computing's SmartFilter software from four competing products from the United States, in part because the company offered a discount. The company and Saudi officials declined to disclose the contract terms." [New York Times, 11/19/01]

Secure Computing Insists Its Blocking Categories Are Not DiscriminatoryBusinessWeek reported that in response to reports of Secure Computing software being used for categorical censorship in Saudi Arabia, "[a] spokesman for Secure says the categories don't 'discriminate on the basis of race, religion, political persuasion, gender, sexual orientation, or any other personal characterization.'" [BusinessWeek, 11/13/08]

  • SmartFilter Is A Powerful Regulatory Tool. Secure Computing's SmartFilter software "provides a proven database of over 20 million blockable Web sites in over 91 categories." The categories include: Art/Culture/Heritage, Education/Reference, General News, History, Politics/Opinion, and Religion/Ideology. [SmartFilter 4/9/09; categories 4/9/09]

All Saudi Internet Traffic Is Funneled Through The Government-Utilized Secure Computing Software.   The New York Times reported that Secure Computing provided "Internet-filtering software to the Saudi government."  Additionally, "no Muslim nation has been as active a user of the software as has Saudi Arabia. By royal decree, virtually all public Internet traffic to and from Saudi Arabia has been funneled through a single control center outside Riyadh since the Internet was introduced in the kingdom nearly three years ago." [New York Times, 11/19/01]

Secure Computing Software "Was Customized To Include Specific Sites The Saudis Perceived As Defaming Islam Or The Royal Family." According to the New York Times, "SmartFilter came with ready-made categories like pornography and gambling and was customized to include specific sites the Saudis perceived as defaming Islam or the royal family." [New York Times, 11/19/01]

The Saudi Government Censors Human Rights Websites.  The New York Times reported: "Saudi security agencies identify the political Web sites that are considered for inclusion on the blacklist. Among the banned sites are the Committee for the Defense of Human Rights in the Arabian Peninsula (www.cdrhap.com) and the Movement for Islamic Reform in Arabia (www.islah.org). Even some less politically charged sites, including ones that recount the history of Saudi Arabia, are blocked." [New York Times, 11/19/01, parentheses original]

The Iranian Government Used Secure Computing Software To Censor The Internet

"One Of The World's Most Substantial Censorship Regimes" Operated By Secure Computing.  Information Week reported: "In a report released earlier this year, [Open Net Initiative] stated that Iran used software from Secure Computing, based in San Jose, Calif. to operate 'one of the world's most substantial censorship regimes' in 2004 and 2005." [Information Week, 10/14/05]

Iranian Government Used Secure Computing Software To Censor Internet Usage.  The BBC reported that the Iranian government was censoring the Internet "using SmartFilter, commercially available filtering software produced by a US company called Secure Computing. SmartFilter, according to the Secure Computing website, comes with a database of millions of blockable web addresses, in more than 60 categories. Mr Villeneuve said a user, like the Iranian government, can take that commercial list, and then add sites it wants to block for political reasons." [BBC.co.uk, 6/24/05]

  • SmartFilter Is A Powerful Regulatory Tool. Secure Computing's SmartFilter software "provides a proven database of over 20 million blockable Web sites in over 91 categories." The categories include: Art/Culture/Heritage, Education/Reference, General News, History, Politics/Opinion, and Religion/Ideology. [SmartFilter 4/9/09; categories 4/9/09]

Iran Admitted Using Secure Computing Software "As The Primary Technical Engine Of Its Filtering System."  According to the OpenNet Initiative, "Iran has recently acknowledged, as our testing confirms, that it uses the commercial filtering package SmartFilter - made by the US-based company, Secure Computing - as the primary technical engine of its filtering system. This commercial software product is configured as part of the Iranian filtering system to block both internationally-hosted sites in English and sites in local languages." [OpenNet.net, "Internet Filtering in Iran in 2004-2005: A Country Study," accessed 4/14/09]

  • OpenNet Is An International, Academic Research Coalition. According to its website, "[t]he OpenNet Initiative is a collaborative partnership of four leading academic institutions: the Citizen Lab at the Munk Centre for International Studies, University of Toronto; Berkman Center for Internet & Society at Harvard University; the Advanced Network Research Group at the Cambridge Security Programme, University of Cambridge; and the Oxford Internet Institute, Oxford University." [OpenNet.net, accessed 4/14/09]

In Iran, "Authors And Technical Staff Of Sites Have Been Questioned And Even Arrested." According to the OpenNet Initiative, "Internet content regulation in Iran occurs at multiple levels, through multiple methods. ISPs filter foreign sites using Secure Computing's SmartFilter software, which is developed in the United States.  Sites based in Iran can be shut down, suspended, or filtered through direct methods (state orders or pressure) or indirect methods (informal pressure on ISPs); authors and technical staff of sites have been questioned and even arrested." [OpenNet.net, "Internet Filtering in Iran in 2004-2005: A Country Study," accessed 4/14/09, parentheses original]

Secure Computing Denied Providing Iran With Software.  The BBC reported: "Secure Computing did not agree to an interview but issued a statement saying that it 'has sold no licenses to any entity in Iran,' and that use of its software in Iran has been done without its consent.  Secure Computing also said it was actively taking steps to stop what it called this illegal use of their products. The company maintains that it is 'fully complying with the export laws, policies and regulations of the United States.'" [BBC.co.uk, 6/24/05]

Secure Computing "Complicit" In The Worst Censorship In The World.  Agence France Presse reported that Secure Computing "was cited in a report Tuesday by the OpenNet Initiative, a partnership of researchers that called Iran's Internet censorship among the worst in the world and called the US firm 'complicit.' 'We have been made aware of ISPs (Internet service providers) in Iran making illegal and unauthorized attempts to use of our software,' McNulty said. 'Secure Computing is actively taking steps to stop this illegal use of our products.'" [Agence France Presse, 6/22/05, accessed via Factiva]

 Secure Computing Accused Iran Of Stealing Their SoftwareInformation Week reported: "Secure Computing Public Relations Manager David Burt said Friday that the company is actively trying to stop Iran from using its software. 'It's illegal to sell to them, so we're not selling to them,' Burt said. 'They're essentially stealing our products. We're blocking attempts to download from IPs that we know originate in Iran.'" [Information Week, 10/14/05]

Open Net Initiative Questioned Whether Secure Computing's Support Services Had Also Been Stolen.  In response to Secure Computing CEO John McNulty's statement regarding Iran's illegal use of Secure Computing software, the OpenNet Iran report stated: "The statement does not address whether automatic updates to block lists routinely made available to SmartFilter users by Secure Computing have also been made available to Iranian ISPs, nor does it address the extent to which the adoption of SmartFilter and its updated block list for 'non-profit and advocacy organizations' by additional governments (such as Saudi Arabia...) is part of Secure Computing's market." [OpenNet.net, "Internet Filtering in Iran in 2004-2005: A Country Study," accessed 4/14/09, parentheses original]

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