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

News you may have missed #858

Recep Tayyip ErdoğanBy IAN ALLEN | intelNews.org
►►The FBI facilitates NSA’s domestic surveillance. Shane Harris writes in Foreign Policy: “When the media and members of Congress say the NSA spies on Americans, what they really mean is that the FBI helps the NSA do it, providing a technical and legal infrastructure that permits the NSA, which by law collects foreign intelligence, to operate on US soil. It’s the FBI, a domestic US law enforcement agency, that collects digital information from at least nine American technology companies as part of the NSA’s PRISM system. It was the FBI that petitioned the Foreign Intelligence Surveillance Court to order Verizon Business Network Services, one of the United States’ biggest telecom carriers for corporations, to hand over the call records of millions of its customers to the NSA”.
►►Egypt expels Turkish ambassador. Egypt says it has ordered the Turkish ambassador to be expelled, following comments by Turkey’s prime minister. Saturday’s decision comes after Turkish Prime Minister Recep Tayyip Erdoğan renewed his criticism of Egypt’s new leaders earlier in the week. Turkey and Egypt recalled their ambassadors in August following Turkey’s sharp criticism of Egypt’s leaders and Mohamed Morsi’s ouster. Turkey’s ambassador returned to Egypt a few weeks later, but Egypt has declined to return its ambassador to Turkey. Turkey’s government had forged a close alliance with Morsi since he won Egypt’s first free presidential election in June of 2012.
►►The internet mystery that has the world baffled. For the past two years, a mysterious online organization has been setting the world’s finest code-breakers a series of seemingly unsolvable problems. It is a scavenger hunt that has led thousands of competitors across the web, down telephone lines, out to several physical locations around the globe, and into unchartered areas of the “darknet”. Only one thing is certain: as it stands, no one is entirely sure what the challenge —known as Cicada 3301— is all about or who is behind it. Depending on who you listen to, it’s either a mysterious secret society, a statement by a new political think tank, or an arcane recruitment drive by some quasi-military body. Which means, of course, everyone thinks it’s the CIA.

News you may have missed #814

Ilir KumbaroBy IAN ALLEN | intelNews.org |
►►Israel accuses Palestinian of spying for Hezbollah. Israel’s Shin Bet internal security agency says a Palestinian man has been charged with relaying information to Hezbollah in Lebanon about sensitive government sites, including parliament. It identified the suspect as Azzam Mashahara, a resident of east Jerusalem, which Israel captured in 1967. Palestinian residents of east Jerusalem, unlike Palestinians from the West Bank or the Gaza Strip, have Israeli identity cards that allow them to travel freely within Israel. Mashahara was charged with maintaining contacts with a foreign agent and relaying information to the enemy.
►►UK agency tries to crack coded message from WWII-era carrier pigeon. The note, written on official stationary with the heading “Pigeon Service,” was discovered in a red canister attached to the skeletal leg of a pigeon in a chimney in Surrey, England. The message is made up of 27 seemingly random five-letter blocks and though it’s undated, government analysts believe the pigeon met his end while on a secret mission during the Second World War. The note is signed “Sjt W Stot” and was intended for the destination “XO2”. In a statement, Britain’s Government Communications Headquarters (GCHQ), said that during the war secret communications would often utilize specialized codebooks “in which each code group of four or five letters had a meaning relevant to a specific operation, allowing much information to be sent in a short message”. The GCHQ said that those messages may have been put through an additional layer of security by being re-coded with what’s known as a one-time pad.
►►Albania court convicts fugitive ex-spy chief. An Albanian court has convicted Ilir Kumbaro, the country’s fugitive former intelligence chief, of murder for the 1995 death of a suspect who was illegally detained for an alleged plot to murder the President of the Republic of Macedonia. The victim, businessman Remzi Hoxha, an ethnic Albanian from Macedonia, was abducted by the secret police 17 years ago along with two other suspects for allegedly planning to kill then-Macedonian President Kiro Gligorov during a visit to Albania. The court said the three suspects were held illegally and tortured during questioning. Kumbaro traveled to Britain in 1996 under a false identity, claiming to be a refugee from Kosovo. He has been missing for a year, after skipping an extradition hearing in London. Hoxha was never found and is presumed to have died in custody.

News you may have missed #801

Alan TuringBy IAN ALLEN | intelNews.org |
►►Israel charges Arab man with spying for Hezbollah. Israel has charged Milad Khatib, a 26-year-old Arab Israeli truck driver, who was arrested a month ago, with spying for Hezbollah, making contact with a foreign agent, conspiring to aid the enemy and belonging to an illegal group. According to the indictment, Khatib was in contact with a man named Barhan, a Hezbollah agent who operated in various European locations. The two allegedly met several times between 2007-2009 in Barhan’s home in Denmark, with all of Khatib’s expenses, including food, hospitality and entertainment, covered by Barhan.
►►Britains’ GCHQ praises Alan Turing legacy. In a rare public speech, Iain Lobban, the Director of GCHQ, Britain’s signals intelligence agency, has praised the legacy of British mathematician and codebreaker Alan Turing. Widely considered the father of computer science and artificial intelligence, Turing committed suicide in 1954, after the British government prosecuted him for being a homosexual. In 2009, British Prime Minister Gordon Brown offered a public apology for Turing, who is also credited with cracking the Nazi Enigma code —a vital part of the Allied effort in World War II.
►►Canada’s SIGINT agency to get new headquarters. Canada’s electronic spy organization believes that the state-of-the-art headquarters now being built in an Ottawa suburb will make it a leader among its allies and attract the best and brightest of spies, according to newly released Canadian government documents obtained by The Ottawa Citizen. When finished in 2015-16, the Canadian Communications Security Establishment’s new $880-million spy campus in Gloucester is expected to be home to more than 1,800 employees.

News you may have missed #0111

  • Obama supports extending USA PATRIOT Act domestic spy provisions. The move confirms the US President’s support for the Act, whose warrantless communications monitoring provisions he approved with his Senate vote in 2008.
  • Poland jails alleged Belarusian spy. The man, known only as “Sergei M.” was sentenced Wednesday to five-and-a-half years in prison by a Warsaw district court for spying against Poland between 2005 and 2006. Meanwhile in Belarus four local army officers are still on trial, accused of spying for Poland.
  • Tolkien was trained as a British spy. Novelist JRR Tolkien, whose day occupation was in linguistics research, secretly trained as a British government spy in the run up to World War II, new documents have disclosed.

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News you may have missed #0106

  • North Korean succession rumor mill now silent. Rumors circulated last summer by South Korean intelligence sources, that Kim Jong Il was on his deathbed and was about to be replaced with his son, Kim Jong Un, have gone quiet, after the health of the “Great Leader” appears to have miraculously improved. Some now believe Pyongyang may have deliberately fed those rumors to discern reactions among senior North Korean officials in Kim John Il’s circle.
  • UK government issues apology for treatment of gay cryptanalyst after 57 years. British Prime Minister Gordon Brown has said he is sorry for the “appalling” way World War II code-breaker Alan Turing was treated by British authorities for being gay. In 1952, Turing was prosecuted for gross indecency after admitting a sexual relationship with a man. Two years later, he killed himself. He is most famous for his code-breaking work at Bletchley Park, also known as Station X, during WWII, where he helped create the Bombe that cracked messages enciphered with the German Enigma machines.
  • Ex-chief of Greek secret services to stand for far-right party. Yannis Korantis, who was axed two months ago from his post as chief of Greece’s State Intelligence Service (EYP), said he will stand for extreme-right party LAOS in next month’s parliamentary elections. Notorious neo-Nazi Dimitris Zafeiropoulos, who recently joined LAOS, said he would also stand for the party in Patras, in the northern Peloponnese. LAOS entered parliament for the first time in 2007, with 3.8 percent of votes and 10 parliamentarians.

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Has Skype’s VOIP encryption been broken?

NSA HQ

NSA HQ

By IAN ALLEN | intelNews.org |
I have explained before that the US National Security Agency (NSA) and other intelligence agencies have found it impossible to intercept Skype’s instant messaging and voice traffic. Like other voice-over-Internet protocol (VOIP) communications providers, Skype uses technology that converts audio signals to data, and transports them through most of the Internet infrastructure in binary, rather than audio, format. Furthermore, Skype uses very complex algorithms to encrypt its customers’ communications. Skype has repeatedly pointed to the technical complexities of VOIP communications, arguing that it is often technically impossible to facilitate communications interception requests by government authorities. There are rumors among communications interception specialists that the NSA is offering billions to anyone who can come up with a reliable eavesdropping model for Skype. Remarkably, on August 25, a Swiss software developer released what he claims is the source code of a program for tapping into encrypted Skype communications. I don’t know whether the source code (essentially a trojan) is effective. He claims it is. If this is confirmed, then several people in Fort George F. Meade, Maryland, will be really close paying attention.

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News you may have missed #0042

  • Postcards containing Cold War spy messages unearthed. The postcards, containing chess moves, were posted in 1950 by an unidentified man in Frankfurt, thought to have been an undercover agent, to Graham Mitchell, who was then deputy director general of MI5. The problem is, researchers are not quite sure whether the cryptic text on the postcards is based on British or Soviet codes, because Mitchell was suspected of being a secret Soviet agent at the time.
  • Is NSA actively mapping social networks? There are rumors out there that NSA is monitoring social networking tools, such as Tweeter, Facebook and MySpace, in order to make links between individuals and construct elaborate data-mining-based maps of who associates with whom.
  • US Senate bill would disclose intelligence budget. The US Senate version of the FY2010 intelligence authorization bill would require the President to disclose the aggregate amount requested for intelligence each year. Disclosure of the budget request would enable Congress to appropriate a stand-alone intelligence budget that would no longer need to be concealed misleadingly in other non-intelligence budget accounts.

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News you may have missed #0025

  • BREAKING NEWS: Several news outlets are reporting this morning that it was former US vice-President Dick Cheney who ordered the CIA to conceal from Congress key information about a covert action intelligence program of an undisclosed nature. See here for more.
  • New book claims Ernest Hemingway was KGB agent. The new book Spies: The Rise and Fall of the KGB in America (Yale University Press), co-written by John Earl Haynes, Harvey Klehr and Alexander Vassiliev, alleges that the Nobel prize-winning novelist was on the KGB’s list of agents in America from 1941, when he was given the codename “Argo” by the Soviets.
  • Thousands of former Stasi spies still working in German civil service. A report in the German edition of The Financial Times claims that over 17,000 former members of East Germany’s Stasi remain employed as civil servants in reunified Germany. Stasi is the name commonly used for the Ministry for State Security, communist East Germany’s secret police.
  • NSA director’s secret visit to New Zealand revealed. A reporter accidentally spotted Lieutenant-General Keith Alexander, director of the US National Security Agency, entering a Wellington building accompanied by security personnel. The revelation prompted a spokesperson at the US embassy in Wellington to admit that Alexander was indeed in New Zealand “for consultations with government officials”. The close signals intelligence relationship between the US and New Zealand have been known since 1996.
  • Chinese national caught trying to purchase crypto hardware. Chi Tong Kuok was arrested by the FBI at the Atlanta International Airport en route from Paris to Panama, where he allegedly planned to purchase US military radios. The US government claims Kuok has admitted he was “acting at the direction of officials for the People’s Republic of China”.
  • Taliban say cell phone SIM cards guide US drone strikes. A Taliban circular says SIM cards planted by informants in cell phones used by militants are used to signal American drones in Afghanistan and Pakistan. As IntelNews recently explained, there are suspicions that this and similar discoveries are gradually prompting the Taliban and al-Qaeda to stop using cell phones altogether.

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Comment: EU wants to intercept encrypted VOIP communications

By IAN ALLEN| intelNews.org |
Italian authorities are taking the initiative in a European Union (EU)-wide effort to terminate the tacit immunity of voice-over-Internet-protocol (VOIP) communications from authorized interception. Italy’s delegation to Eurojust, an EU coordination body tasked with combating transnational organized crime, issued a statement last weekend, promising to spearhead a project to “overcome the technical and judicial obstacles to the interception of internet telephony systems”. The statement contains several references to Skype, a Luxembourg-based VOIP provider that has so far reportedly refused to share its communications encryption system with government authorities. Because of this, the latter have accused Skype of providing organized crime syndicates with the ability to communicate without fear of their messages being intercepted.

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Speculation about NSA vetting of Obama’s wireless gadgets

Obama calling

Obama calling

By IAN ALLEN | intelNews.org |
Longtime technology correspondent Declan McCullagh has published a lengthy article speculating about the wireless communications options for incoming US President Barack Obama. He suggests that Obama’s heavy use of Blackberry distinctly raises “the possibility of eavesdropping [on wireless Presidential communications] by hackers and other digital snoops” and reminds that the President-Elect’s cell phone records with Verizon “were improperly accessed last year” by unauthorized company technicians. McCullagh speculates that the incoming President will be separated from his Blackberry and will be given instead a National Security Agency (NSA)-approved PDA phone designed under the US Pentagon’s SME-PED project, which stands for Secure Mobile Environment Portable Electronic Device. SME-PED communications are said to be user-friendly Blackberry replacements for high-level US government officials. McCullagh contacted the NSA for his article. The Agency, of course, declined to comment.

Estonian sleeper agent may have been double spy, say Germans

Herman Simm

Herman Simm

Last month, Estonian counterintelligence agents arrested Herman Simm, a high-level official at the Estonian defense ministry, on charges that he spied on behalf of Russian intelligence for nearly 30 years. At the time, Western counterintelligence officials said Simm, who was in charge of handling all of Estonia’s “classified and top secret material on NATO”, was at the center of “the most serious case of espionage against NATO since the end of the Cold War”. But the complexity of this espionage affair has now increased, with German weekly magazine Der Spiegel reporting that Simm was also a paid informant of the Bundesnachrichtendienst (BND), Germany’s foreign intelligence service. Read more of this post