The intelligence coup of the century-II

ZURICH: The German spy agency, the BND, came to believe the risk of exposure was too great and left the operation in the early 1990s. But the CIA bought the Germans’ stake and simply kept going, wringing Crypto for all its espionage worth until 2018, when the agency sold off the company’s assets, according to current and former officials.

The company’s importance to the global security market had fallen by then, squeezed by the spread of online encryption technology. Once the province of governments and major corporations, strong encryption is now as ubiquitous as apps on cellphones.

Even so, the Crypto operation is relevant to modern espionage. Its reach and duration help to explain how the United States developed an insatiable appetite for global surveillance that was exposed in 2013 by Edward Snowden. There are also echoes of Crypto in the suspicions swirling around modern companies with alleged links to foreign governments, including the Russian anti-virus firm Kaspersky, a texting app tied to the United Arab Emirates and the Chinese telecommunications giant Huawei.

This story is based on the CIA history and a parallel BND account, also obtained by The Post and ZDF, and interviews with current and former Western intelligence officials as well as Crypto employees. Many spoke on the condition of anonymity, citing the sensitivity of the subject.

It is hard to overstate how extraordinary the CIA and BND histories are. Sensitive intelligence files are periodically declassified and released to the public. But it is exceedingly rare, if not unprecedented, to glimpse authoritative internal histories of an entire covert operation.

The Post was able to read all of the documents, but the source of the material insisted that only excerpts be published.

The CIA and the BND declined to comment, though US and German officials did not dispute the authenticity of the documents. The first is a 96-page account of the operation completed in 2004 by the CIA’s Center for the Study of Intelligence, an internal historical branch. The second is an oral history compiled by German intelligence officials in 2008.

The overlapping accounts expose frictions between the two partners over money, control and ethical limits, with the West Germans frequently aghast at the enthusiasm with which U.S. spies often targeted allies.

But both sides describe the operation as successful beyond their wildest projections. At times, including in the 1980s, Crypto accounted for roughly 40 percent of the diplomatic cables and other transmissions by foreign governments that cryptanalysts at the NSA decoded and mined for intelligence, according to the documents.

All the while, Crypto generated millions of dollars in profits that the CIA and BND split and plowed into other operations.

Crypto’s products are still in use in more than a dozen countries around the world, and its orange-and-white sign still looms atop the company’s longtime headquarters building near Zug, Switzerland. But the company was dismembered in 2018, liquidated by shareholders whose identities have been permanently shielded by the byzantine laws of Liechtenstein, a tiny European nation with a Cayman Islands-like reputation for financial secrecy.

Two companies purchased most of Crypto’s assets. The first, CyOne Security, was created as part of a management buyout and now sells security systems exclusively to the Swiss government. The other, Crypto International, took over the former company’s brand and international business.

Each insisted that it has no ongoing connection to any intelligence service, but only one claimed to be unaware of CIA ownership. Their statements were in response to questions from The Post, ZDF and Swiss broadcaster SRF, which also had access to the documents.

CyOne has more substantial links to the now-dissolved Crypto, including that the new company’s chief executive held the same position at Crypto for nearly two decades of CIA ownership.

A CyOne spokesman declined to address any aspect of Crypto AG’s history but said the new firm has “no ties to any foreign intelligence services.”

Andreas Linde, the chairman of the company that now holds the rights to Crypto’s international products and business, said he had no knowledge of the company’s relationship to the CIA and BND before being confronted with the facts in this article.

“We at Crypto International have never had any relationship with the CIA or BND — and please quote me,” he said in an interview. “If what you are saying is true, then absolutely I feel betrayed, and my family feels betrayed, and I feel there will be a lot of employees who will feel betrayed as well as customers.”

The Swiss government announced on Tuesday that it was launching an investigation of Crypto AG’s ties to the CIA and BND. Earlier this month, Swiss officials revoked Crypto International’s export license.

The timing of the Swiss moves was curious. The CIA and BND documents indicate that Swiss officials must have known for decades about Crypto’s ties to the US and German spy services, but intervened only after learning that news organizations were about to expose the arrangement.

The histories, which do not address when or whether the CIA ended its involvement, carry the inevitable biases of documents written from the perspectives of the operation’s architects. They depict Rubicon as a triumph of espionage, one that helped the United States prevail in the Cold War, keep tabs on dozens of authoritarian regimes and protect the interests of the United States and its allies.

The papers largely avoid more unsettling questions, including what the United States knew — and what it did or didn’t do — about countries that used Crypto machines while engaged in assassination plots, ethnic cleansing campaigns and human rights abuses.

The revelations in the documents may provide reason to revisit whether the United States was in position to intervene in, or at least expose, international atrocities, and whether it opted against doing so at times to preserve its access to valuable streams of intelligence.

Nor do the files deal with obvious ethical issues at the core of the operation: the deception and exploitation of adversaries, allies and hundreds of unwitting Crypto employees. Many traveled the world selling or servicing rigged systems with no clue that they were doing so at risk to their own safety.

To be continued