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February 13, 2020

Intelligence coup of century — I

Top Story

February 13, 2020

ZURICH: Switzerland said on Tuesday it was probing reports that the US Central Intelligence Agency and the German BND spy service used a Swiss firm’s encryption technology to crack other nations’ top-secret messages, a British wire service reported.

The company, called Crypto AG, sold code-making equipment to Iran, India, Pakistan, Latin American nations and dozens of other countries, even Vatican. The technology was modified to let the CIA and BND break codes, the Washington Post reported along with German and Swiss broadcasters ZDF and SRF. They described a Cold War-era caper in which American spymasters and counterparts from what was then West Germany from 1970 were responsible for nearly all Crypto AG operations, from hiring and firing to sales tactics.

The reports cite a classified CIA history to underpin the allegations, some of which date back at least to 1992, when one of Crypto’s employees was arrested and held in Iran for nine monthsas a suspected spy.

At the time, the company dismissed reports that it was a secret asset of Western intelligence agencies as “an unbelievable conspiracy theory”, according to a report in German magazine Focus detailing a 1994 book on the subject.

In 1995, the Baltimore Sun also reported on Crypto AG’s close ties to the US National Security Agency. After being told late last year of new research about the company, the Swiss government appointed a former Swiss Supreme Court judge last month to scrutinise Crypto’s activities “to investigate and clarify the facts of the matter”, the Swiss Defense Ministry said.

“The events under discussion date back to 1945 and are difficult to reconstruct and interpret in the present day context,” it added in a statement. Judge Niklaus Oberholzer is due to report back by the end of June, after which the Swiss cabinet will be briefed.


The reports said that at least four countries - Israel, Britain, Sweden and officially neutral Switzerland - knew of the operation, called “Operation Rubicon”, or were allowed access to some of the secrets it unearthed.

If Swiss authorities permitted its activities, Crypto may not have violated any Swiss laws seeking to limit “unwelcome” espionage activities by foreign agents on its soil.

However, one politician, Green Party member Balthasar Glaettli, told the nation’s state broadcaster that if the country knew of Crypto’s activities, “it would undermine the foundations of our political identity”.

According to one document attributed to the CIA history of the operation, for more than half a century, governments all over the world trusted the Crypto AG to keep the communications of their spies, soldiers and diplomats secret.

Crypto AG, got its first break with a contract to build code-making machines for US troops during World War II. Flush with cash, it became a dominant maker of encryption devices for decades, navigating waves of technology from mechanical gears to electronic circuits and, finally, silicon chips and software.

The Swiss firm made millions of dollars selling equipment to more than 120 countries well into the 21st century.

But what none of its customers ever knew was that Crypto AG was secretly owned by the CIA in a highly classified partnership with West German intelligence. These spy agencies rigged the company’s devices so they could easily break the codes that countries used to send encrypted messages.

The decades-long arrangement, among the most closely guarded secrets of the Cold War, is laid bare in a classified, comprehensive CIA history of the operation obtained by The Washington Post and ZDF, a German public broadcaster, in a joint reporting project.

The account identifies the CIA officers who ran the program and the company executives entrusted to execute it. It traces the origin of the venture as well as the internal conflicts that nearly derailed it. It describes how the United States and its allies exploited other nations’ gullibility for years, taking their money and stealing their secrets.

The operation, known first by the code name “Thesaurus” and later “Rubicon,” ranks among the most audacious in CIA history.

“It was the intelligence coup of the century,” the CIA report concludes. “Foreign governments were paying good money to the U.S. and West Germany for the privilege of having their most secret communications read by at least two (and possibly as many as five or six) foreign countries.”

From 1970 on, the CIA and its code-breaking sibling, the National Security Agency, controlled nearly every aspect of Crypto’s operations — presiding with their German partners over hiring decisions, designing its technology, sabotaging its algorithms and directing its sales targets.

Then, the U.S. and West German spies sat back and listened.

They monitored Iran’s mullahs during the 1979 hostage crisis, fed intelligence about Argentina’s military to Britain during the Falklands War, tracked the assassination campaigns of South American dictators and caught Libyan officials congratulating themselves on the 1986 bombing of a Berlin disco.

The program had limits. America’s main adversaries, including the Soviet Union and China, were never Crypto customers. Their well-founded suspicions of the company’s ties to the West shielded them from exposure, although the CIA history suggests that US spies learned a great deal by monitoring other countries’ interactions with Moscow and Beijing.

There were also security breaches that put Crypto under clouds of suspicion. Documents released in the 1970s showed extensive — and incriminating — correspondence between an NSA pioneer and Crypto’s founder. Foreign targets were tipped off by the careless statements of public officials including President Ronald Reagan. And the 1992 arrest of a Crypto salesman in Iran, who did not realize he was selling rigged equipment, triggered a devastating “storm of publicity,” according to the CIA history.

But the true extent of the company’s relationship with the CIA and its German counterpart was until now never revealed.

To be continued