Swiss intelligence chief to step down following dispute over Crypto AG spy scandal

Crypto AG

THE DIRECTOR OF SWITZERLAND’S spy service will step down once his mandate ends in August, allegedly over a dispute with the country’s governing council about the Crypto AG affair, which shook Swiss politics last year. Jean-Philippe Gaudin headed Switzerland’s Military Intelligence Service from 2008 to 2015. He then served as a defense attaché at the Swiss embassy in Paris, France, before being appointed by the then-Defense Minister, Guy Parmelin as director of the Federal Intelligence Service (FIS). Founded in 2010, the FIS performs both domestic and external intelligence functions in the Alpine state.

But, according to reports in the Swiss media, Gaudin is not expected to continue in his post once his mandate ends, on August 31. The reason seems to be tensions within the Swiss government over the so-called Crypto AG affair. The scandal centers on the world’s leading manufacturer of cryptologic equipment during the Cold War, Crypto AG, whose clients included over 120 governments around the world. In February of last year, The Washington Post and the German public broadcaster ZDF confirmed reports that had been circulating since the early 1980s, that Crypto AG was a front for American intelligence. According to the revelations, the Central Intelligence Agency and West Germany’s Federal Intelligence Service secretly purchased the Swiss company in the 1950s and paid off most of its senior executives in order to buy their silence.

The secret deal, dubbed Operation RUBICON, allegedly allowed the US and West Germany to spy on the classified government communications of many of their adversaries —and even allies, including Austria, Italy, Spain, Greece, Jordan, Saudi Arabia and the United Arab Emirates. The revelation about the secret deal shocked Swiss public opinion and embarrassed the government of a nation that bases its national identity and international reputation on the concept of neutrality.

Earlier this year, a parliamentary report into the Crypto AG affair concluded that Gaudin had essentially mishandled the case and had waited too long to inform the nation’s leadership about it. Gaudin’s behavior resulted in tension in his relationship with the Swiss Federal Council —a seven-member executive body that forms the federal government and serves as the collective decision-making body of the Swiss Confederation. According to reports, the spy chief’s relationship with Switzerland’s Defense Minister, Viola Amherd, is beyond repair, and the minister has been pushing for his resignation for several months.

In a statement released on Wednesday, the Swiss government gave no reason for Gaudin’s pending career change, saying only that the spy chief would move on to “new challenges” in the private sector. He will reportedly be replaced by Juerg Buehler, who will serve as interim director of the FIS until further notice. Neither the FIS nor Gaudin have made public comments about this sudden development.

Author: Joseph Fitsanakis | Date: 13 May 2021 | Permalink

Swiss government files criminal complaint over Crypto AG scandal involving CIA

Crypto AGSwitzerland’s Federal Department of Finance has filed a criminal complaint “against persons unknown” over media reports that a leading Swiss-based cryptological equipment manufacturer was secretly owned by the United States Central Intelligence Agency (CIA).

The complaint relates to Crypto AG, the world’s leading manufacturer of cryptologic equipment during the Cold War, whose clients included over 120 governments around the world. Last month, The Washington Post and the German public broadcaster ZDF appeared to confirm reports that had been circulating since the early 1980s, that Crypto AG was a front for American intelligence. According to the revelations, the CIA and West Germany’s Federal Intelligence Service (BND) secretly purchased the Swiss company in the 1950s and paid off most of its senior executives in order to buy their silence. The secret deal, dubbed Operation RUBICON, allegedly allowed the US and West Germany to spy on the classified government communications of several of their adversaries —and even allies, including Austria, Italy, Spain, Greece, Jordan, Saudi Arabia and the United Arab Emirates.

The revelation about the secret deal has shocked Swiss public opinion and embarrassed the government of a nation that bases its national identity and international reputation on the concept of neutrality. For this reason, the Swiss Federal Department of Finance has filed a criminal complaint about the case. The complaint was announced by the Office of the Swiss Attorney General on Monday, following reports in the Swiss media. It said that it received a criminal complaint by the State Secretariat for Economic Affairs (SECO), which is the part of the Finance Department that authorizes exports of sensitive software or hardware. SECO officials argue that they were deceived into authorizing the export of Crypto AG’s products without realizing they had been compromised by the company’s secret agreement with the CIA and the BND. Accordingly, the secret agreement violates Swiss federal law governing the regulation of exports, SECO officials claim.

The Office of the Attorney General said it would review the criminal complaint and decide whether it warrants criminal proceedings. Meanwhile, a probe into the alleged Crypto AG-CIA-BND conspiracy, which was launched by the Swiss government last month, is already underway, and is expected to conclude in June. The Swiss Federal Assembly (the country’s parliament) is also expected to launch its own investigation into the alleged affair.

Author: Joseph Fitsanakis | Date: 03 March 2020 | Permalink

Swiss neutrality ‘shattered’ as leading cryptologic firm revealed to be CIA front

Crypto AGSwitzerland is reeling from the shock caused by revelations last week that Crypto AG, the world’s leading manufacturer or cryptologic equipment during the Cold War, whose clients included over 120 governments around the world, was a front company owned by the United States Central Intelligence Agency.

The revelation, published last Tuesday by The Washington Post and the German public broadcaster ZDF, confirmed rumors that had been circulating since the early 1980s, that Crypto AG had made a secret deal with the US government. It was believed that the Swiss-based company had allowed the US National Security Agency to read the classified messages of dozens of nations that purchased Crypto AG’s encoding equipment. These rumors were further-substantiated in 2015, when a BBC investigation unearthed evidence of a “gentleman’s agreement”, dating to 1955, between a leading NSA official and Boris Hagelin, the Norwegian-born founder and owner of Crypto AG.

But the reality of this alleged secret pact appears to have been even more controversial. According to last week’s revelations, the CIA and West Germany’s Federal Intelligence Service (BND) secretly purchased the Swiss company and paid off most of its senior executives in order to buy their silence. The secret deal allegedly allowed the US and West Germany to spy on the classified government communications of several of their adversaries —and even allies, including Italy, Spain and Greece, as well as Austria, Jordan, Saudi Arabia and the United Arab Emirates.

What is more, the secret CIA/BND partnership with Crypto AG was known to senior British and Israeli officials, and information derived from it was routinely shared with them. Government officials in Switzerland and even Sweden were aware that Crypto AG had been compromised, but remained silent.

American and German authorities have not commented on the revelations. But the story has monopolized Swiss media headlines for several days. Some news outlets have opined that the traditional Swiss concept of political neutrality has been “shattered”. Meanwhile, a Swiss federal judge has opened an investigation into the revelations, as the Swiss parliament is preparing to launch an official inquiry. Switzerland’s Prime Minister, Simonetta Sommaruga, said on Sunday that the government would discuss the issue “when we have the facts”.

Author: Joseph Fitsanakis | Date: 17 February 2020 | Permalink

Memos may relate to 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, allegedly 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 appear to provide further 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, claim to have 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

FBI thanks French police for high-profile arrest of Luxembourg’s former top spy

Luxembourg City

AGENTS OF THE UNITED States Federal Bureau of Investigation visited the northeastern French city of Nancy last week, reportedly to thank its local police force for arresting a former senior officer in Luxembourg’s spy agency. The case is said to be connected to a notorious cyptocurrency-based fraud scheme, which some claim may be the largest in history.

Frank Schneider headed the operations directorate of the Service de Renseignement de l’État Luxembourgeois (SREL), Luxembourg’s intelligence agency. Although he left the service in 2008, his name came up frequently in the context of a spy scandal that eventually brought down Luxembourg’s prime minister, Jean-Claude Juncker. The former spy was eventually acquitted of illegal conduct in that case —but he now appears to be in legal trouble of a different kind.

According to reports, US authorities have been looking for a man referred to in French media as “Frank S.” in connection to a massive Ponzi scheme that allegedly involves OneCoin, a Bulgarian-based cyptocurrency firm. British newspaper The Times has described the scheme as “one of the biggest scams in history”. It is believed that the OneCoin scheme defrauded victims around the world of over $4 billion.

Schneider was reportedly arrested on April 29 in Audun-le-Tiche, a small town on the French-Luxembourg border and not far from the Belgian and German borders. His arrest took place pursuant to an international warrant, which was later confirmed to have been issued by authorities in New York. It was reported at the time that Schneider’s arrest involved the deployment of members of Brigade de recherche et d’intervention —France’s equivalent of the Special Weapons And Tactics (SWAT) teams in the US.

The former spy is currently being held in detention at the Nancy-Maxéville prison, and is highly likely to be extradited to the US. American authorities have until June 28 to submit a formal extradition request to the Nancy office of the prosecutor.

Author: Joseph Fitsanakis | Date: 14 June 2021 | Permalink

We knew about the US-Danish spy collaboration. The revelations are still remarkable

DDIS DenmarkTHE FIRST CLAIMS OF an alleged secret collaboration between the signals intelligence agencies of the United States and Denmark surfaced in November of 2020. By January of this year, it was clear that the Danish government would, sooner or later, need to deal with the fallout of its controversial spy deal with Washington, under which Denmark enabled the US to spy on some of its closest European allies. Still, the news last weekend that Denmark helped the US spy on countries such as Germany, France, Sweden and Norway, is nothing short of remarkable, and has a huge symbolic significance that cannot be overlooked.

IntelNews regulars will recall that Lars Findsen, director of the Danish Defense Intelligence Service (FE, or DDIS in English) was unceremoniously “relieved of duty” in August of 2020. This was in response to a damning report by the Danish Oversight Board, known as TET, which is responsible for supervising the work of Denmark’s intelligence agencies. The Danish Ministry of Defense would not discuss the precise nature of the report, which at the time was believed to relate to vaguely described “improper intelligence collection practices”.

Then, in November of 2020 came news of an alleged secret collaboration between the DDIS and its American equivalent, the National Security Agency (NSA). According to Danish newspaper Jyllands-Posten and Danmarks Radio —Denmark’s public-service broadcaster— the agreement dated to 2008, and involved the use by the NSA of a number of fiber optic Internet cables that pass through Danish territory, in return for the DDIS being given access to the content of intercepted traffic. This collaboration resulted in the interception of information belonging to the governments of Germany, France, Sweden, Norway and Holland, among others.

It is said among intelligence practitioners that “there is no such thing as a friendly foreign intelligence agency”. There is also no known agreement not to spy on each other between the United States and several core countries of the Western alliance, such as Denmark, France, Holland, Norway, Germany, Belgium, Italy, Sweden, or Spain (it is rumored that a “no-spy clause” exists between Five Eyes participants). Technically speaking, therefore, espionage between European powers, or between them and the US, is not in violation of some sacred agreement. Read more of this post

Year in review: The biggest spy-related stories of 2020, part III

End of Year ReviewSince 2008, when intelNews was launched, it has been our end-of-year tradition to take a look back and highlight what we believe were the most important intelligence-related stories of the past 12 months. In anticipation of what 2021 may bring in this highly volatile field, we present you with our selection of the top spy stories of 2020. They are listed below in reverse order of significance, starting from 10 and leading up to 1. This is part three in a three-part series. Part one is available here and part two is here.

01. COVID-19 prompts spy agencies’ mission shift that is ‘reminiscent of the space race’. The worldwide competition to invent a vaccine that can curtail the spread of COVID-19, and to secure sufficient quantities of the vaccine, has prompted a mission shift in major intelligence agencies around the world. This mission shift is taking place with such speed that it is “reminiscent of the space race”, according to The New York Times. In an article published in September, the paper cited “interviews with current and former intelligence officials and others tracking the espionage efforts”, who suggest that the mission shift observed in spy agencies worldwide has been among the fastest in history.

02. Swiss neutrality ‘shattered’ as leading cryptologic firm revealed to be CIA front. Switzerland continues to reel from the shock caused by revelations in February that Crypto AG, the world’s leading manufacturer or cryptologic equipment during the Cold War, whose clients included over 120 governments around the world, was a front company owned by the United States Central Intelligence Agency. The revelation, published by The Washington Post and the German public broadcaster ZDF, confirmed rumors that had been circulating since the early 1980s, that Crypto AG had made a secret deal with the US government. According to this year’s revelations, the CIA and West Germany’s Federal Intelligence Service (BND) secretly purchased the Swiss company and paid off most of its senior executives in order to buy their silence. The secret deal allegedly allowed the US and West Germany to spy on the classified government communications of several of their adversaries —and even allies, including Italy, Spain and Greece, as well as Austria, Jordan, Saudi Arabia and the United Arab Emirates.

03. Danish spy service helped US collect intelligence on NATO allies. There was surprise among intelligence observers in August, when Lars Findsen, director of the Danish Defense Intelligence Service (FE, or DDIS in English) was “relieved of duty for the time being”. The Danish Ministry of Defense said the decision was taken following “a series of whistleblower revelations”. We now know the reason: apparently a secret arrangement between Danish and American intelligence agencies enabled Washington to collect intelligence on Danish citizens, as well as spy on some of its closest European allies, including Germany, France, Sweden, Norway, and Holland. The revelation prompted a heated political discussion in Denmark, while Norwegian, Swedish and Dutch authorities launched investigations into the alleged spying. Some in Denmark called for the Minister of Defense, Trine Bramsen, to release to the public a four-volume report government produced about the alleged Danish-US spy collaboration. This has not yet happened.

04. US forces are secretly helping the Taliban fight the Islamic State in Afghanistan. The original reason the United States sent troops to Afghanistan was to fight al-Qaeda and its local allies, the Taliban. Now, however, it appears US forces are helping the Taliban defeat the Islamic State in northeastern Afghanistan. The American military’s newfound role in Afghanistan reportedly reflects the view of the White House that the Taliban have no aspirations outside of Afghanistan, while the Islamic State seeks to challenge America’s interests worldwide. According to The Washington Post‘s military affairs reporter Wesley Morgan, US Joint Special Operations Command (JSOC) forces in Afghanistan have been instructed to provide air cover to Taliban forces as they fight the Islamic State. The resources used in that capacity consist of weaponry that was initially deployed against the Taliban, but is now being secretly repurposed to assist the Taliban in their fight against the Islamic State. According to Morgan, the JSOC team in Kunar, which provides air cover to the Taliban, jokingly refers to itself as the “Taliban air force”. It is unclear whether al-Qaeda, which is a close ally of the Taliban, is benefiting from that assistance.

This is part three in a three-part series. Part one is available here and part two is here.

Author: J. Fitsanakis and I. Allen | Date: 31 December 2020 | Permalink

North Korea targeted UN Security Council officials with spear-phishing campaign

United Nations headquartersComputer hackers working for North Korea launched cyberattacks against carefully selected officials of national delegations belonging to the United Nations Security Council, according to a soon-to-be released report. The report is expected to be submitted early next month to the UN Security Council Sanctions Committee on North Korea.

Known previously as the UN Security Council Committee Established Pursuant to Resolution 1718, the committee was created in 2006 as part of the UN Security Council’s resolution 1718. The resolution was implemented in response to the first nuclear test conducted by North Korea on October 9 of that year, which confirmed beyond doubt the existence of Pyongyang’s nuclear weapons program. The committee’s mission is to gather information about North Korea’s nuclear activities, examine and evaluate the impact of international sanctions, and issue periodic recommendations to the UN National Security Council.

A draft version of the report was leaked to the media earlier this week. It states that a North Korean cyberattack targeted at least 11 officials belonging to six different national delegations that are members of the UN National Security Council. According to the draft report, the 11 officials were targeted earlier this year via a so-called “spear-phishing” campaign. The term refers to cyber-espionage operations in which hackers carefully select specific staff members of larger organizations for penetration. The targeted officials were reportedly approached using Gmail and WhatsApp, by a group of hackers who used fake identities.

The report also details efforts by the North Korean regime to acquire foreign hard currency through illicit hacking operations, as well as by illicitly acquiring virtual assets, such as cryptocurrencies. There is increasing speculation among North Korea observers about Pyongyang’s involvement in the cryptocurrency industry —though how exactly the government manages to cash out its alleged cryptocurrency assets remains a mystery.

Author: Joseph Fitsanakis | Date: 05 August 2020 | Permalink

Analysis: A look at the CIA’s half-century-old ‘disease intelligence’ program

CIAThe general discussion about how and when the White House was alerted by its spy agencies about COVID-19, points to the existence of ‘disease intelligence’ programs in the United States Intelligence Community. Relatively little is known about the history and current state of these programs. Last weekend, however, ABC News’ investigative correspondent Lee Ferran brought to light an article from 48 years ago in a declassified intelligence publication that sheds light on the roots of the Central Intelligence Agency’s disease intelligence effort.

The article was published in the declassified edition of Studies in Intelligence, the CIA’s in-house research publication. Written by Warren F. Carey and Myles Maxfield, the article appeared [.pdf] in the spring 1972 issue of the journal, and is titled “Intelligence Implications of Disease”. It discusses the 1966 outbreak of meningitis in China’s Guangdong Province, which prompted the CIA to begin tracking diseases in a systematic way. The outbreak first appeared in the city that is today known as Guangzhou, and within weeks it had resulted in a military takeover of the Chinese healthcare system. The latter collapsed in places, and prompted the CIA’s Office of Scientific Intelligence (known today as the Directorate of Science and Technology) to begin collecting data in order to assess the political fallout of the disease.

The article states that the CIA cryptonym for the disease was Project IMPACT. Its scope was limited, but it expanded 1968, when the world health community began to issue alerts about the so-called Hong Kong flu. Known officially as Hong Kong/A2/68, the virus spread around the world in a few months, and is believed to have killed between 1 and 4 million people, including around 100,000 Americans. At that time, according to the article in Studies in Intelligence, the CIA’s Project IMPACT “went global”, and was combined with BLACKFLAG, an ongoing effort by the Agency to “computerize disease information and derive trends, cycles and predictions” on a global scale.

Project BLACKFLAG tracked the spread of the disease in the Soviet Union and in North Vietnam, and issued regular analyses of the political ramification of the epidemic. That was not easy, say the authors, given the fact that most nations of the communist bloc tried to conceal information about it. The CIA was also able to issue warnings to its teams of operatives abroad, instructing them to shield themselves from the flu as it spread around East Asia and, eventually, the world.

According the authors, the CIA’s early disease intelligence projects were able to demonstrate that data aggregation was critical in helping monitor and forecast outbreaks. It also showed that these such forecasts could have “an initiating and vital role” in political, military and economic intelligence. Today, says Ferran, the CIA’s disease intelligence program has the same twofold mission it had when it was first conceived: first, to collect intelligence about the actual extent of the spread of diseases abroad —which may differ from the official information provided by foreign governments; and second, to try to forecast the consequences of these trends for American interests in the regions impacted by an ongoing epidemic or pandemic.

► Author: Joseph Fitsanakis | Date: 22 June 2020 | Permalink

News you may have missed #899

Kevin RuddDutch spies helped Britain break Argentine crypto during Falklands War. Flowing from revelations made earlier this year that Swiss cipher machine company Crypto AG was owned by the CIA and its German counterpart the BND during most of the Cold War, an academic paper has described the Maximator alliance which grew from the Crypto AG compromise. Authored by Professor Bart Jacobs of Radboud University Nijmegen in the Netherlands, the article argues that Dutch spies operating as a part of the Maximator alliance helped Britain’s GCHQ break Argentinian codes during the Falklands War.
The Pandemic’s Geopolitical Aftershocks Are Coming. With most European countries confident that they are past the worst of the coronavirus pandemic, their attention is turning to the chance of its resurgence once society returns to some semblance of normal. But beyond the epidemiological challenges lies a slowly amassing threat that is not pathological in nature, but economic, political, and military. This is the geopolitical second wave, and its power is already starting to concern Western leaders.
The coming post-COVID anarchy. The former prime minister of Australia, Kevin Rudd (pictured), argues in this article that “China and the United States are both likely to emerge from this crisis significantly diminished […]. Both powers will be weakened, at home and abroad”, he opines. And he goes on to suggest that “the result will be a continued slow but steady drift toward international anarchy across everything from international security to trade to pandemic management […]. The chaotic nature of national and global responses to the pandemic thus stands as a warning of what could come on an even broader scale”.

Author: Ian Allen | Date: 24 May 2020 | Permalink

Victor Sheymov, among Cold War’s most important KGB defectors, dies at 73

Victor SheymovVictor Ivanovich Sheymov, who is often referred to as one of the most important intelligence defectors of the Cold War, has reportedly died in the American state of Virginia. He was one of the most senior officials in the Soviet Union’s Committee for State Security (KGB) to ever defect to the West, and revealed important KGB secrets to the United States.

Sheymov was born in 1946 to a family of elite Soviet scientists. His father was an engineer and his mother a doctor specializing in cardiology. A gifted mathematician and student-athlete, Sheymov was recruited into the KGB almost as soon as he graduated from the elite Bauman Moscow State Technical University, where he majored in engineering. By his early 30s, Sheymov had risen to the rank of major under the KGB’s Eighth Chief Directorate, which handled secret communications systems. He oversaw a large unit that monitored the flow of information between the KGB’s headquarters and the agency’s operatives around the world. In later years, Sheymov was assigned code-breaking and counter-espionage tasks, and oversaw the preparation of daily classified briefings for the Politburo —the Communist Party’s highest policy-making body.

But in the 1970s Sheymov grew disillusioned with Soviet politics, and began to feel slighted by the infighting and incompetence inside the KGB. While visiting Poland on KGB business, he volunteered his services to the Central Intelligence Agency (CIA) by walking into the US embassy in Warsaw. The CIA eventually gave him the cryptonym CKUTOPIA and, after verifying his senior status inside the KGB, exfiltrated him to the United States along with his wife and 5-year-old daughter. His was the first known instance of a successful CIA exfiltration of a defector from Soviet territory.

After spending several months being debriefed and polygraphed at a CIA safe house, Sheymov and his family were given new identities and US citizenship. But the defector decided to emerge from hiding in 1990, as the USSR was dissolving. In his book about his espionage work and defection, titled Tower of Secrets, Sheymov said he informed the CIA about the KGB’s unsuccessful plots to assassinate Pope John Paul II and about the successful operation to assassinate Afghan President Hafizullah Amin in 1979. His insights were also instrumental in the decision of the US State Department to demolish the US embassy in Moscow, due to fears about the presence of listening devices planted inside the building’s walls by Soviet builders. The building was eventually replaced with another structure built by vetted American workers.

Sheymov was awarded the US Intelligence Medal and lived the rest of his life in America, where he headed a computer security company. He died on October 18 in Vienna, Virginia, but his death was not publicly reported until this week. Sheymov’s wife told reporters that he died from health complications arising from chronic pulmonary disease.

Author: Joseph Fitsanakis | Date: 10 December 2019 | Permalink

Extradition fight over Russian man held in Greece may point to spies’ use of bitcoin

Aleksandr VinnikAn intense fight between the United States and Russia over the extradition of a Russian cryptocurrency tycoon being held in Greece, is raising questions about the possible use of cryptocurrencies by spies. The tycoon in question is Aleksandr Vinnik, 39, who in 2011 co-founded BTC-e, an international cryptocurrency-trading platform. BTC-e allowed users to buy or sell several popular cryptocurrencies, including bitcoin and litecoin, using Russian rubles, United States dollars, or European Union euro currencies. Although headquartered in Russia, BTC-e’s servers were located in Bulgaria, while its operations were conducted through its offshore components in Cyprus and the Seychelles.

By 2015, BTC-e was reportedly facilitating just over 3 percent of the worldwide daily volume of cryptocurrency trading. But, according to some sources, the company was also facilitating up to 70 percent of worldwide criminal activity involving cryptocurrencies. Washington alleges that the company was built on a model that relied heavily on the activities of criminal entities, as the latter sought the ability to conduct online monetary transactions without being tracked by governments.

In 2017, American authorities seized BTC-e’s website —a move that terminated the company’s operations. Washington also prompted authorities in Greece to arrest Vinnik, while he was vacationing at a Greek resort with his family. The Russian co-founder of BTC-e is today in a Greek prison, awaiting a decision by the Greek authorities to extradite him to the United States. If this happens, he will be tried on 21 counts of international money laundering and a host of other criminal charges.

Interestingly, however, shortly after Vinnik’s arrest, the Russian government filed a court order to have Greece extradite him to Russia, where he is reportedly wanted for relatively minor fraud-related charges. What is more, the Greek government was directly lobbied by no other than the Russian President Vladimir Putin —an unusually high-level approach, when one considers Vinnik’s trivial charges in Russia. France has also sought to have Vinnik extradited there, instead of the United States.

What lies behind these moves? There are many who believe that American authorities moved against BTC-e after realizing that Russian spies used the company to hide their traces while trying to meddle with the 2016 presidential elections in the United States. A recent report by the State Department’s RFE/RL news website claims that a number of London-based observers from groups such as Global Witness and Elliptic Enterprises believe there are strong links between Russian spy agencies and BTC-e. American authorities have managed to access information about the inner workings of BTC-e’s website. They are probably viewing Vinnik as an intelligence asset, who can potentially shed light on the company’s alleged role as a money laundering mechanism for Russian spies —and probably others as well.

Author: Joseph Fitsanakis | Date: 29 November 2019 | Permalink

NSA chief preempts move to fire him by entering talks with Trump

Michael S. RogersThe director of the United States National Security Agency has taken the unprecedented step of entering talks with president-elect Donald Trump, amidst reports that President Barack Obama may fire him. Admiral Michael S. Rogers, 57, a US Navy cryptologist with a military career that spans over three decades, has been at the helm of the NSA since April of 2014. Last weekend, however, The Washington Post alleged that senior US military and intelligence officials urged President Obama to fire him. Citing “several US officials familiar with the matter”, The Post said on Saturday that a recommendation to fire Admiral Rogers was delivered to the President in October by Secretary of Defense Ashton B. Carter and the Director of National Intelligence James R. Clapper.

Secretary Carter is allegedly displeased with the NSA director’s performance, following what The Post said were “persistent complaints from NSA personnel” that Admiral Rogers is “aloof, frequently absent” from his duties, and tends to disregard input from his advisors at NSA. DNI Clapper added to Rogers’ list of concerns, while also proposing that the NSA should be led by a civilian administrator. The paper alleged that the president agreed with the recommendations and had planned to replace Admiral Rogers with an acting NSA director shortly before the election of November 8. That would reportedly allow the incoming president to appoint a new director of their preference in the new year. However, the move was delayed due to ongoing discussions about balancing the NSA’s military and civilian roles.

In the meantime, it appears that the NSA director preempted his impending firing by entering negotiations with president-elect Donald Trump about joining the new administration. According to The Post, Trump is considering appointing Admiral Rogers to the post of DNI, to replace Clapper. The paper described the Admiral’s move to meet with Trump without notifying his superiors —including the president— as “unprecedented for a military officer”. The NSA director’s move has allegedly displeased the Obama administration, but it is unclear how the president will respond. During a press conference in Lima, Peru, on Sunday, President Obama declined to answer questions about Admiral Rogers’ rumored replacement. He described the NSA director as “a terrific patriot”, but added that it was not his practice to comment on matters relating to personnel appointments. The Department of Defense, Office of the DNI, and the NSA have all declined to comment on the matter.

Author: Joseph Fitsanakis | Date: 21 November 2016 | Permalink

Death sentence for Chinese computer technician accused of espionage

Chengdu, ChinaA former computer technician who worked on cryptology has been sentenced to death in China after being found guilty in what some describe as one of the country’s most damaging espionage cases in recent years. The man, Huang Yu, is reportedly a 41-year-old computer expert who worked for a government-funded research institute specializing in cryptology —the science of making and breaking secret codes. He was arrested in 2011 in Chengdu, the capital of Sichuan province in southwestern China.

According to state-run broadcaster China Central Television, Huang spied on his country from 2002 to 2011, when he was arrested. During that time, he is believed to have sold 150,000 documents to a foreign intelligence agency, in exchange for $700,000. The documents allegedly included 90 reports that were classified as ‘top-secret’, and contained Chinese military codes. Some commentators have described Huang’s espionage as having caused “one of the largest known leaks [of government secrets] in China in recent years”. However, government prosecutors have refused to release information about the foreign spy agency that Huang is accused of having worked for. In addition to giving Huang a death sentence, the court sentenced his wife to five years in prison, while her brother will spend three years behind bars.

Huang’s death sentence is the first delivered in China for espionage since late 2008, when two Chinese scientists were put to death for spying for Taiwan. Some experts believe that Huang’s case signifies an intensification of efforts by the Chinese government to protect its secrets from foreign espionage. These efforts began in 2014, when Chinese President Xi Jinping enacted new counterespionage legislation featuring harsher penalties for Chinese citizens who work as agents of foreign spy agencies. Earlier this month, the Chinese state marked the country’s first “National Security Education Day”, which included the establishment of a new “counterespionage hotline” designed to accept anonymous tips from citizens about suspected foreign spies.

Author: Joseph Fitsanakis | Date: 20 April 2016 | Permalink

British government releases MI5 file on little-known Cold War spy

Cedric BelfrageThe British government has released a nine-volume file on an influential film critic who some believe was “one of the most important spies the Soviet Union ever had”. Cedric Belfrage was born in 1904 in London and read English Literature at Cambridge University in the 1920s. While a student at Cambridge he made a name for himself as a reviewer of motion pictures, and by the early 1930s he was known as Britain’s highest-paid film critic. Soon afterwards he moved to the American city of Los Angeles, where he became a film and theater correspondent for British tabloid newspaper The Daily Express. But a multivolume file on him compiled by the British Security Service (MI5) and released last week by the National Archives in London, confirms that Belfrage spied for Soviet intelligence under the codename BENJAMIN.

According to the file, Belfrage turned to communism after witnessing the effects of the Great Depression in the United States. After a 1936 trip to the USSR, he reached out to the Communist Party of the US, which eventually put him in touch with a number of Soviet intelligence operatives in America. In 1940, the Secret Intelligence Service (MI6) set up the British Security Coordination (BSC) in New York. It was a clandestine propaganda project aimed at turning local public opinion in favor of America’s entry into World War II. Belfrage was one of many writers and intellectuals that were recruited by the BSC to help counter the prevalent isolationist sentiment in the country. The film critic worked for MI6 until 1943, and then returned to Britain to join another wartime propaganda outfit, the Political Warfare Executive.

At war’s end, Belfrage returned to the US, only to find that he had attracted the attention of the Federal Bureau of Investigation. The FBI had discovered that the British film critic had dealings with the Communist Party in the 1930s and suspected that he may have worked for Soviet intelligence. Further investigations revealed that Belfrage had indeed conducted espionage under the guidance of Jacob Golos, a Ukrainian-born American who managed a large network of pro-Soviet spies in America in the interwar period. But when he was questioned by the FBI, Belfrage said that he had given Golos a number of British —not American— government documents under direct orders by MI6. The latter allegedly hoped that the Soviets would reciprocate the move within the context of the anti-Nazi alliance between the UK and the USSR.

Eventually, Belfrage was brought up before the House Un-American Activities Committee (HUAC) of the US Congress in 1953. The Committee was conducting public hearings aimed at unmasking suspected communist sympathizers in the American entertainment industry. But the British-born film critic refused to answer questions put to him, prompting HUAC to recommend that he should be deported from the country. The government adopted the Committee’s recommendation and deported Belfrage in 1955 for having been a member of the Communist Party under a fake name. Belfrage traveled throughout the Caribbean and Latin America before settling in Mexico, where he died in 1990, aged 86.

Interestingly, the British files reveal that MI5 decided not to prosecute Belfrage, most likely in order to avoid the embarrassment of admitting that British intelligence had employed a Soviet spy. The decision was probably not unrelated to the public scandal that followed the escape of the so-called Cambridge spies to the Soviet Union. Interestingly, Belfrage studied at Cambridge at the same time that Kim Philby (Soviet cryptonym STANLEY), Donald Duart Maclean (HOMER) and Guy Burgess (HICKS) were students there. But there is no evidence he ever collaborated with them, as he was not interested in politics at that time.

Author: Joseph Fitsanakis | Date: 24 August 2015 | Permalink