Memos confirm secret NSA deal with leading cryptography vendor

William FriedmanIn 2007 I wrote in my “National Security Agency: The Historiography of Concealment” that America’s leading signals intelligence agency had made a secret deal with Crypto AG, a Swiss-based manufacturer of cryptographical equipment. The agreement, which lasted for much of the Cold War, allowed the NSA to read the classified messages of dozens of nations that purchased encoding equipment from Crypto AG. As I expected, the claim drew criticism from individuals connected with Crypto AG, including company scientists, who argued that the Swiss manufacturer would never have agreed to a deal that undermined its professional reputation as a trusted and neutral vendor of cryptological devices. Now, however, the BBC has revealed two recently declassified NSA memos that provide concrete proof of the deal.

My 2007 claim was based on a string of well documented allegations that surfaced in the early 1980s. While conducting research for his seminal book The Puzzle Palace, historian James Bamford came across references to Project BORIS, which involved a pact between the NSA and the Swiss company. To be precise, the deal appeared to have been struck between the Swiss inventor and Crypto AG founder Boris Hagelin and William F. Friedman, an American cryptologist who led the Armed Forces Security Agency, a forerunner of the NSA. The two men were united by a deep personal friendship, which was forged during World War II by their mutual hatred of Nazism.

Bamford’s claim was echoed in 1996 by Scott Shane and Tom Bowman, reporters for The Baltimore Sun. In a six-part investigative series about the NSA, the two journalists wrote that Friedman visited Hagelin during a trip to Switzerland in 1955 and asked for his help so that American could dominate its Cold War rivals. According to Shane and Bowman, Hagelin agreed and built a type of cryptological backdoor in Crypto AG’s devices, which allowed the NSA to read millions of messages for many decades. The company, of course, reacted furiously, saying that claims of a secret deal were “pure invention”.

On Thursday, however, BBC security correspondent Gordon Corera confirmed that a BBC investigation of 55,000 pages of documents, which were declassified by the NSA in April, found proof of the secret agreement. The declassified material, said Corera, contains two versions of the same NSA memorandum, as well as an earlier draft, which refer to a “gentleman’s agreement” between Friedman and Hagelin. Under the agreement, Crypto AG would inform the NSA about periodical changes to the technical specifications of its encoding machines. The company would also provide the American spy agency with detailed lists showing the precise models purchased by various national governments around the world. Furthermore, Crypto AG agreed not to sell the more advanced, customizable models of its equipment to countries viewed by Washington as directly adversarial. This, says the BBC, amounted to Crypto AG deceiving some of its customers, by offering them “watered-down versions” of its encoding devices.

Corera notes that there is no evidence in the memos that Crypto AG built any kind of back door in its devices for use by the NSA. Instead, by providing the American agency with detailed operational knowledge of the devices, it enabled American codebreakers to reduce the time and effort needed to break encoded messages intercepted by the NSA.

There are a couple of minor errors in Corera’s article. For instance, the “father of American code-breaking” is not Friedman, as he claims, but Herbert Yardley, who led the so-called Black Chamber (also known as the Cipher Bureau) in 1919, long before Friedman was in the picture. Additionally, he fails to mention Bowman’s contribution to Shane’s Baltimore Sun article, which was published in 1996, not 1995, as he writes. These minor errors aside, however, the BBC discovery is absolutely crucial for our understanding of cryptological history in the Cold War.

Author: Joseph Fitsanakis | Date: 31 July 2015 | Permalink

US Congressional review considers impact of federal database hack

Office of Personnel Management 2A United States Congressional review into last month’s cyber theft of millions of government personnel records has concluded that its impact will go far “beyond mere theft of classified information”. Up to 21 million individual files were stolen in June, when hackers broke into the computer system of the Office of Personnel Management (OPM). Part of OPM’s job is to handle applications for security clearances for all agencies of the US federal government. Consequently, the breach gave the unidentified hackers access to the names and sensitive personal records of millions of Americans —including intelligence officers— who have filed applications for security clearances.

So far, however, there is no concrete proof in the public domain that the hack was perpetrated by agents of a foreign government for the purpose of espionage. Although there are strong suspicions in favor of the espionage theory, there are still some who believe that the cyber theft could have been the financially motivated work of a sophisticated criminal ring. But a new report produced by the Congressional Research Service, which is the research wing of the US Congress, seems to be favoring the view that “the OPM data were taken for espionage rather than for criminal purposes”. The report was completed on July 17 and circulated on a restricted basis. But it was acquired by the Secrecy News blog of the Federation of American Scientists, which published it on Tuesday.

The 10-page document points out that strictly financial reasons, such as identity theft or credit card fraud, cannot be ruled out as possible motivations of the massive data breach. But it points out that the stolen data have yet to appear in so-called “darknet” websites that are used by the criminal underworld to buy and sell such information. This is highly unusual, particularly when one considers the massive size of the data theft, which involves millions of Americans’ credit card and Social Security numbers. Experts doubt, therefore, that the OPM data “will ever appear for sale in the online black market”. This inevitably leads to the conclusion that the breach falls “in the category of intelligence-gathering, rather than commercial espionage”, according to the report.

The above conclusion could have far-reaching consequences, says the report. One such possible consequence is that high-resolution fingerprints that were contained in the OPM database could be used to blow the covers of American case officers posing as diplomats, and even deep-cover intelligence operatives working secretly abroad. Furthermore, the hackers that are in possession of the stolen files could use them to create high-quality forged documents, or even publish them in efforts to cause embarrassment to American intelligence agencies.

Author: Ian Allen | Date: 30 July 2015 | Permalink: http://intelnews.org/2015/07/30/01-1746/

Will Israeli spy Pollard receive secret spy wages after US lets him go?

Jonathan PollardLawyers for Jonathan Pollard, an American with Israeli citizenship who spied on the United States for Israel in the 1980s, confirmed on Tuesday that he will be released in November, by which time he will have served 30 years of a life sentence. The news was welcomed by Pollard’s supporters in Israel, who consider him a hero, as well as by pro-Israel Americans, who have been pressuring the US government to release him. But Newsweek’s veteran intelligence correspondent Jeff Stein responded to the news of Pollard’s release by posing an interesting question: when Pollard is released, will he have access to close to $1 million in spy wages that his Israeli handlers are reputed to have deposited for him in a Swiss bank account?

Stein was referring to a practice that is common among intelligence agencies, namely to deposit cash in offshore bank accounts as a way of compensating their assets. The latter can gradually access those funds during trips abroad, usually after their retirement, long after having ceased their espionage activities. If the asset is arrested or perishes, the funds are usually passed on to the asset’s surviving relatives. This method protects the asset from the prying eyes of counterintelligence agencies in the asset’s home country, and sends a message to future recruits that assets and their families will be taken care of by their handlers.

Following Pollard’s arrest in 1985, US government prosecutors repeatedly rejected the view, put forward by Pollard’s legal team, that the former US Navy analyst was a romantic who had spied on the US for Israel because he wanted to assist a small country surrounded by enemies. They told the court that Pollard had also spied for South Africa and had tried to spy for Australia, before finally settling for working for Israel. Far from being a romantic, they said, Pollard was a calculated businessman, who sought financial compensation for his services to the Jewish state. Indeed, according to the Naval Criminal Investigative Service and the Federal Bureau of Investigation, Pollard had pocketed at least $50,000 from his Israeli handers by the time of his arrest, in addition to receiving several expensive items as gifts. The spy had also been promised that Israel would deposit $30,000 every year in a Swiss bank account, which Pollard could access after his retirement.

In his article published Tuesday, Stein wonders whether Israel has continued to deposit $30,000 a year in Pollard’s reputed Swiss bank account, which is a standard practice for intelligence agencies. If the answer is yes, then the amount available today would be in the neighborhood of $1 million. If Pollard moves to Israel come November, as many believe he will, will he then have access to the money he earned by spying on the US government as an unregistered agent of a foreign power? And if so, how should this be expected to affect the already rocky relations between Washington and Tel Aviv?

Stein said he spoke to Pollard’s New York lawyer, Eliot Lauer, who called the rumors of a secret Swiss bank account “poppycock” and added that Pollard had been “secured employment and housing […] in the New York area”. Additionally, there are some who speculate that Pollard may not be allowed to leave the US as part of the conditions of his parole. At this stage, however, nobody knows for sure. Stein contacted the US Parole Commission, NCIS and the Central Intelligence Agency, but all declined comment.

Author: Joseph Fitsanakis | Date: 29 July 2015 | Permalink: http://intelnews.org/2015/07/29/01-1745/

US spy for Israel ‘may be released’ as part of Iran nuclear deal

Jonathan PollardA United States Navy intelligence analyst, who is serving a life sentence for spying on America for Israel, may soon be set free in an effort by Washington to quieten Israeli criticism of a recently struck international agreement on Iran’s nuclear program. Many in US counterintelligence consider Pollard, who acquired Israeli citizenship in 1995, one of the most damaging double spies in American history. But he is widely viewed as a hero in Israel, and many Israelis, as well as pro-Israel Americans, have been pressuring the US administration of President Barack Obama to release him. He has so far served nearly 30 years of his life sentence.

The Wall Street Journal published an article on Friday suggesting that the Obama administration was “preparing to release” Pollard. Citing unnamed US officials, the paper said Washington hoped that the move would “smooth [America’s] relations with Israel in the wake of the Iran nuclear deal”. The latter was signed earlier this month between Tehran and the so-called P5+1 nations, namely the five permanent members of the United Nations Security Council plus Germany. The New York Times added to the speculation on Saturday with a detailed front-page article, which confirmed that “some in Washington appear to be highlighting” Pollard’s upcoming 30-year parole hearing, which is set to take place in November. It added that the White House was contemplating using Pollard’s release to appease, not only Tel Aviv, but also pro-Israel supporters in Congress, many of whom have campaigned for years in favor of Pollard’s release.

But the paper also cautioned that linking a possible release of the jailed American spy with the Iranian nuclear deal was risky and could in fact provoke a serious backlash. It quoted Israeli and American analysts who said that, although Israel was in the past prepared to accept Pollard’s release in exchange for minor concessions in its conflict with the Palestinians, the coalition government of Israeli Prime Minister Benjamin Netanyahu considers the nuclear agreement with Iran to be “too serious a threat” to concede to, no matter what the trade-off is from Washington. Some Israeli commentators used strong words to describe Washington’s alleged plan to release Pollard as a way of appeasing Israel, describing it as “cynical, cheap and misguided”.

The Times said it contacted the US National Security Council on Friday and was told by a spokesman that there was “absolutely zero linkage between Mr. Pollard’s status and foreign policy considerations”.

Author: Joseph Fitsanakis | Date: 27 July 2015 | Permalink: http://intelnews.org/2015/07/27/01-1743/

Did US DEA forces pose as Mexican troops to capture drug kingpin?

Joaquín ‘El Chapo’ GuzmánThe notorious drug lord Joaquín ‘El Chapo’ Guzmán captured the attention of the world’s media a few weeks ago, when he escaped from a maximum security prison in Mexico through a secret tunnel. But his cinematic prison breakout may have overshadowed the story of his arrest, which, according to recent reports, may be as interesting as that of his latest escape from prison.

Guzmán was arrested in a pre-dawn raid on February 22, 2014. He was reportedly captured in Mazatlán, a resort town in Mexico’s west-coast state of Sinaloa, by an elite squad of Mexican marines. The marines, we were told at the time, were receiving crucial intelligence support from a several United States government agencies. Or at least that is the official story of the drug kingpin’s arrest. On July 18, however, Mexico’s leading investigative newsmagazine, Proceso, published a lead article alleging that Guzmán was not arrested by Mexican marines, but by American operatives disguised as Mexican marines.

The article was written by J. Jesús Esquivel, a longtime reporter on intelligence and security affairs, who has authored two books on the history of operations conducted by the Drug Enforcement Administration (DEA), the Central Intelligence Agency (CIA) and other American security and intelligence agencies in Mexico. In his July 18 article, Esquivel says he was told by two American officials —who he does not name— that Mexican marines had little to do with Guzmán’s capture. The drug lord was tracked down by the US Marshals Service and the DEA through a web of informants and electronic tracking devices. Once they knew they had him, he two agencies, supported by a third American agency, which Esquivel does not identify, raided Guzmán’s hotel suite in Mazatlán, dressed in Mexican marine uniforms and driving vehicles bearing Mexican navy insignia.

The Intercept, which covered Proceso’s story on Thursday, correctly stated that, if the newsmagazine’s allegations are true, they would not mark the first time that American government agents posing as Mexican troops have conducted counternarcotics operations in Mexico. The practice has been revealed before, most recently by The Wall Street Journal. But, if true, Proceso’s allegations would seem to indicate an unprecedented degree of operational activity by US intelligence and security agencies south of the border. Additionally, it is alleged that the American agencies deliberately chose to keep their Mexican counterparts in the dark until after Guzmán had been captured, because they feared that the drug kingpin would be notified by informants inside the Mexican government. If this information is accurate, it would indicate that the line separating the Mexican drug cartels from the country’s government remains markedly blurry.

Author: Ian Allen | Date: 24 July 2015 | Permalink: http://intelnews.org/2015/07/24/01-1742/

CIA using Macau casinos to recruit Chinese officials, says report

Sands casino in Macau ChinaOfficials in China think that United States spy agencies are using casinos in Macau to entrap Chinese government employees, according to a report produced on behalf of an American-owned casino chain in the former Portuguese colony. The report was produced by a private investigator and was commissioned by Sands China, the Macau branch of a casino venture owned by American gambling magnate Sheldon Adelson. Its goal was to investigate why the Chinese-appointed authorities in Macau were hostile to the gambling industry in general and Sands China in particular.

The report is dated June 25, 2010, and includes a warning that it should not be shared with Chinese officials in Macau or in mainland China. It cites several unnamed officials in China’s Liaison Office, which governs Macau and Hong Kong, as well as sources in China’s Ministry of Foreign Affairs, and Chinese businessmen with close ties to the government in Beijing. It suggests that Beijing is weary of the damage caused to its public image by thousands of its employees gambling away an estimated $2 billion each year in Macau. Additionally, says the report, the central government in Beijing is hostile to the foreign-owned gambling industry in Macau because it believes that it collaborates with Western intelligence agencies. Sands China establishments in Macau, in particular, are believed by the Chinese government to be recruiting grounds for the United States Central Intelligence Agency, says the 2010 report.

Citing “well-placed sources” in the Chinese capital, the report suggests that the fear of espionage is “the primary subject” that causes Beijing’s hostility toward Sands China. It notes that “many of the [Chinese] officials we contacted were of the view that US intelligence agencies […] have penetrated and utilized the casinos [in Macau] to support their operations”. It adds that Chinese counterintelligence agencies have “evidence” that CIA operatives “monitor mainland government officials” who visit Macau to gamble, paying particular attention to those losing large amounts of money, or those visiting Macau without the knowledge of their superiors. They then “lure and entrap” them, forcing them “to cooperate with US government interests”.

The report was uncovered by the Investigative Reporting Program of the University of California Berkeley’s Graduate School of Journalism and published on Wednesday in British broadsheet The Guardian. The paper said the report was among a set of documents filed with a court in Las Vegas, where the former head of Sands’ Macau casinos is suing the company for wrongful dismissal. The Guardian contacted the Sands Company, which rejected the contents of the report as “a collection of meaningless speculation”. Its senior vice president for global communications and corporate affairs, Ron Reese, also dismissed the report as “an idea for a movie script”.

Author: Joseph Fitsanakis | Date: 23 July 2015 | Permalink: http://intelnews.org/2015/07/23/01-1741/

French-US spy cooperation continues despite WikiLeaks revelations

 Ashton B. Carter and  Jean-Yves Le DrianA fortnight ago, I gave an interview to Spanish newspaper La Razón, in which I argued that last month’s WikiLeaks revelations about American espionage against France would not cause any drastic disruption in the intelligence cooperation between the two countries. I added that “the two countries depend on each other to address a number of international issues that affect both, such the worrying situation in Syria and Iraq, the continuing crises in Ukraine and in Libya, as well as the financial meltdown in Greece. So there is a recognition that their intelligence agencies must continue to work together on several pressing issues”.

This was confirmed on Monday morning, as the American and French defense secretaries met in the US. French Minister of Defense Jean-Yves Le Drian paid his first visit to the Pentagon since Ashton B. Carter was appointed Secretary of Defense, in February of this year. After an extensive meeting behind closed doors, the two men told reporters gathered at the Pentagon that America’s security cooperation with France “has never been stronger”. Secretary Carter pointed to France’s leading military involvement in several African nations, including Mali, Chad, and Niger, and said that French forces deployed there could expect “more intelligence-sharing with the United States”. He added that actions had been taken during that morning’s meeting to “increase that [intelligence-sharing] yet further”.

The French Defense Minister agreed with his American counterpart and added that the “multiplication of international crises” were bringing the defense and intelligence establishments of France and the US closer. Both men pointed to examples of ongoing French-American security collaboration in Mali and Chad, where the Pentagon is providing French military forces with aerial cargo delivery and refueling facilities. They also mentioned the FS Charles de Gaulle, France’s flagship aircraft carrier, which has been deployed to the Arabian Gulf since March of this year. Secretary Carter told reporters that the Charles de Gaulle had “integrated seamlessly” with American forces in the region, and was helping the Pentagon launch airstrikes against Islamic State forces in Iraq.

The two men declined comment on last month’s claims by WikiLeaks that the US National Security Agency wiretapped three successive French presidents, including the country’s current head of state, Francois Hollande.

Author: Ian Allen | Date: 08 July 2015 | Permalink: http://intelnews.org/2015/07/08/01-1731/

Follow

Get every new post delivered to your Inbox.

Join 946 other followers