“On November 27, the State Department — the US government basically — wrote a letter saying that the WikiLeaks activities were deemed illegal in the United States and as a result our [acceptable use] policy group had to make the decision of suspending the account,” PayPal’s VP of Platform Osama Bedier said on stage at Le Web 2010 conference in Paris today, TechCrunch reported. He later clarified that this letter was not sent to Paypal but was addressed to Julian Assange and his lawyer Jennifer Robinson.

This is what the State Department letter from legal adviser Harold Hongju Koh says on the legality of WikiLeaks activities:

As you know, if any of the materials you intend to publish were provided by any government officials, or any intermediary without proper authorization, they were provided in violation of U.S. law and without regard for the grave consequences of this action. As long as WikiLeaks holds such material, the violation of the law is ongoing.

The letter then goes on to provide an assessment of the damage that publication of “documents of this nature at a minimum would” cause. It also claims that WikiLeaks is not acting in accordance with the organization’s stated principles.

The only illegal action that the State Department identified was one that could be committed by a US government official. If WikiLeaks itself was violating or about to violate any law, it’s hard to imagine that the State Department would be mealy mouthed about stating the fact. Indeed, not only would the legal infraction be spelled out but likewise the legal consequences.

For that reason — the lack of legal recourse — State was forced to fall back on moral persuasion, in the hope that it might pressure WikiLeaks to do what the US government regards as “the right thing.”

The fact that the administration is now clutching at straws in its pursuit of a legal case against WikiLeaks is evident in the suggestion that Assange might be charged with receiving stolen property. If that happens, Bill Keller at the New York Times better get ready to turn himself in — for that matter, virtually every journalist in America should volunteer to be arrested.

One can only assume that Paypal, Visa, Mastercard and other corporations that are now acting as lackeys for the Obama administration in its witch-hunt against WikiLeaks, hope that come the day they themselves run afoul of the law, they can expect leniency in return for today’s favors. Even worse, they seem happy to display a corporate-government solidarity that reflects the all too transparent fact that representative democracy now means government of corporations, for corporations, by corporations.