So Long Admiral..., page 1

Poindexter to Resign Following Terrorist Futures Debacle

By ERIC SCHMITT

WASHINGTON, July 31 � The Pentagon official who oversaw the development of a plan for the military to operate a terrorist futures-trading market is resigning under pressure, a senior defense official said today.

John M. Poindexter, a retired rear admiral who was President Ronald Reagan's national security adviser, is stepping down "in the next few weeks," the official said, following disclosure of a proposal that outraged lawmakers and embarrassed senior Pentagon officials. The plan was to create in essence an online betting parlor that would have rewarded investors who forecast terrorist attacks, assassinations and coups.

While Defense Secretary Donald H. Rumsfeld did not personally dismiss Admiral Poindexter, the defense official said, Mr. Rumsfeld agreed that the admiral's credibility was shot and it was time for him to go.

"It's fair to say that the secretary understood what Admiral Poindexter understands, which is that it's difficult for any work that he might be associated with to receive a dispassionate hearing," said the official, who spoke to a group of reporters at the Pentagon today on the condition of anonymity.

Admiral Poindexter first gained notoriety in the Iran-contra scandal during the Reagan administration, and more recently he oversaw a Pentagon program that proposed spying electronically on Americans to monitor potential terrorists.

Under that plan, Admiral Poindexter envisioned a program of sweeping electronic surveillance as a way of forestalling terrorism by tapping into computer databases to collect medical, travel, credit and financial records.

The current furor centered on an initiative called Policy Analysis Market. Under the plan, traders were to be able to begin registering on Friday to trade futures on developments in the Middle East as of Oct. 1 on a Web site of the Policy Analysis Market, which the Pentagon was operating with private partners.

"We've had a couple of programs of varying degrees of merit that have been seen as certainly as unorthodox," the defense official said today. "It's cutting edge and beyond that in some cases perhaps."

The official praised Admiral Poindexter for his "very creative intellect," but said it was highly doubtful that the Pentagon would seek his advice as a consultant in the future.

Admiral Poindexter's pending departure was disclosed today in The Wall Street Journal.