Germany drops espionage case against senior Swiss intelligence official

Paul ZinnikerGermany has dropped a criminal case against the second-in-command of Switzerland’s intelligence agency, who was accused by Berlin of authorizing an espionage operation against the German tax collection service. A year ago, Germany launched an unprecedented investigation into three senior officials of Switzerland’s intelligence agency, the Federal Intelligence Service (NDB). The probe was launched on suspicion that the Swiss officials masterminded a spy operation against German tax investigators who were probing the activities of Swiss banks. The German probe was launched three months after authorities in Germany arrested a Swiss intelligence officer, identified only as “Daniel M.”, for engaging in espionage on German soil.

The German government believes that billions of euros have been deposited by its citizens in banking institutions in European tax-havens like Liechtenstein, Switzerland or Monaco. For the past decade, German authorities have resorted to bribing whistleblowers in offshore banks in order to acquire internal documents that reveal the identities of German citizens who are hiding their money in foreign bank accounts. It is estimated that over a hundred million dollars have been paid to whistleblowers by German authorities since 2006. The latter argue that the proceeds collected from unpaid taxes and fines more than justify the payments made out to whistleblowers. But the Swiss government has strongly criticized Berlin for encouraging Swiss banking sector employees to steal internal corporate information that often breaks Switzerland’s stringent privacy laws. It is believed that the NDB has been instructed by the Swiss government to monitor efforts by German tax-fraud investigators to approach potential whistleblowers working in the Swiss banking sector.

The man identified as “Daniel M.” appears to be one of several Swiss spies who have been collecting information on the activities of German tax investigators. For a while it appeared that German counterintelligence officials were intent on targeting Paul Zinniker (pictured), Deputy Director of the NDB. They claimed that Zinniker was the main support officer of the operation that “Daniel M.” was participating in when he was arrested in Germany in 2017. According to the Germans, it was Zinniker’s who conceived the operation in 2011. But on Monday a spokesman for Germany’s federal prosecutor told the Swiss News Agency that Berlin dropped the case against Zinniker back in June. The revelation came less than 48 hours after a report in the Sunday edition of the Swiss newspaper Neue Zürcher Zeitung claimed that the charges against Zinniker would be dropped. According to the German federal prosecutor’s office, the case against the Swiss spy official was dropped because of the lack of cooperation by Swiss authorities, which made it impossible to prove that Zinniker was indeed the mastermind of the espionage operation against Berlin.

Author: Joseph Fitsanakis | Date: 04 September 2018 | Permalink

News you may have missed #894: Economic warfare edition

Ali bin Smaikh al-Marri►►This website has covered extensively the ongoing diplomatic war between Qatar, widely seen as an Iranian ally, and a coalition of Arab countries led by Saudi Arabia. In July of last year, the Saudi-led coalition —namely the United Arab Emirates, Egypt and Bahrain— broke relations with Qatar and imposed a commercial embargo on the small oil kingdom, which they accuse of supporting Iran and Iranian-backed militant groups in the region. On January 8, the National Human Rights Committee of Qatar accused Saudi Arabia and its allies of carrying out a “unilateral, abusive, arbitrary” and illegal economic blockade. The head of the committee, Ali bin Smaikh al-Marri, said that the Saudi-led blockade amounted to “economic warfare”. Does he have a point? Does economic warfare constitute a tangible part of the arsenal of modern nations, or is it a fantastical concept with little relation to reality?

►►Giuseppe Gagliano, director of the Centro Studi Strategici Carlo De Cristoforis in Italy, argues that economic warfare has been practiced for centuries. While examining the concept of economic intelligence in contemporary French strategic thinking, Professor Gagliano, explains that the concept of economic warfare has deep historical roots. He argues that, in its contemporary form, economic warfare originates in the period immediately after the end of World War II. Traditionally, it has defensive and offensive applications: Nations strive to limit outsourcing in order to preserve their industrial resources; at the same time, they seek to conquer international markets and, when able, resources. Although outsourcing has played a major role in economic warfare, the financial crisis of 2008 significantly upped the stakes and renewed the central role of the state in economic warfare theory and practice, argues Gagliano.

►►It should perhaps be noted that economic warfare does not operate simply an appendage to traditional warfare. In fact, it often takes place in the absence of traditional warfare, or indeed between wars. David Katz, senior analyst at the United States Special Operations Command and a career Foreign Service Officer, argues that economic warfare can, if used substantially and effectively, deter proxy warfare. In an article [pdf] published last year in Parameters, the quarterly journal of the United States Army War College, Katz suggests that the principles of economic warfare could be used “independently and within campaigns” by state actors. He also argues that the US should not hesitate to employ economic warfare to preempt the non-traditional warfare capabilities of its adversaries.

Author: Ian Allen | Date: 26 January 2018 | Permalink

Probe uncovers massive $3 billion secret bribe fund in Azerbaijan

Ilham AliyevAn investigation by a consortium of European newspapers has uncovered details of a massive slush fund worth nearly $3 billion, which was allegedly used by Azerbaijan’s governing elite to bribe officials, business leaders and journalists at home and abroad. The fund was operated out of Baku, the capital of the former Soviet state, which is routinely accused of human-rights abuses. Western countries, including the United States, censure the government of the oil-rich state for its role in systematic abuses. These involve high levels of public- and private-sector corruption, vote-rigging, politically motivated disappearances, and wide curtailment of basic civil liberties. This new information is bound to add to Azerbaijan’s image as a secretive oil-rich state ruled by corrupt elite connected to the country’s President, Ilham Aliyev, and his family.

The existence of the slush fund was revealed by the Organized Crime and Corruption Reporting Project (OCCRP), an international investigative consortium. The OCCRP’s report was published in Tuesday, following a lengthy investigation by members of 17 European news media, including publications in the United States, Britain, Germany, France, Denmark and Belgium. The report states that the fund, which it nicknames “the Azerbaijani Laundromat”, was operational for over two years, from 2012 to 2014. During that time, it participated in “over 13,000 transactions”, many of which were carried out through companies based in the United Kingdom but registered in the British Virgin Islands, Belize and the Seychelles. Payments were processed by the Estonian branch of Danske Bank, a major European banking institution.

According to the OCCRP report, most of the fund’s recipients were politicians, business executives, reporters and other influential people in Western Europe, as well as Turkey and Central Asia. Other recipients included wealthy families in Azerbaijan, who used the funds to finance a luxurious lifestyle, according to the report. Some foreign recipients of the funds were politicians, journalists or lobbyists who have been vocal in supporting Azerbaijan’s government and its policies. Most of the funds are believed to have originated from Azerbaijani-based companies, primarily Baktelecom MMC. But Russian-based companies, including Rosoboronexport, Russia’s state-operated exporter and importer of defense-related technologies, also contributed over $30 million to the slush fund.

Perhaps most controversially, the OCCRP report alleges that some of the secret slash funds originated from senior cabinet members in Azerbaijan, as well as some intelligence officials. It also states that investigators uncovered “ample evidence of [the fund’s] connection to the family of [Azerbaijan’s longtime] President Ilham Aliyev”. Late on Tuesday, a statement issued by President Aliyev’s office rejected the report as “baseless, malicious and […] provocative in nature”. More reactions to the OCCRP report are expected in the coming days.

Author: Joseph Fitsanakis | Date: 06 September 2017 | Permalink

Germany investigates Swiss intelligence officers over espionage claims

Germany SwitzerlandGermany has launched an unprecedented investigation into three officers of Switzerland’s intelligence agency on suspicion that they spied on German tax investigators who were probing the activities of Swiss banks. News of the investigation comes three months after authorities in Germany arrested another Swiss intelligence officer, identified only as “Daniel M.”, for engaging in espionage on German soil. German media report that the three unnamed men are officers of Switzerland’s Federal Intelligence Service (NDB). They are suspected of engaging in the same type of activity as “Daniel M.”, namely monitoring German tax-fraud investigators.

The German government believes that billions of euros are deposited by its citizens in banking institutions in European tax-havens like Liechtenstein, Switzerland or Monaco. For the past decade, German authorities have resorted to bribing whistleblowers in offshore banks in order to acquire internal documents that reveal the identities of German citizens who are hiding their money in foreign bank accounts. It is estimated that over a hundred million dollars have been paid to whistleblowers by German authorities since 2006. The latter argue that the proceeds collected from unpaid taxes and fines more than justify the payments made out to whistleblowers. But the Swiss government has strongly criticized Berlin for encouraging Swiss banking sector employees to steal internal corporate information that often breaks Switzerland’s stringent privacy laws. It is believed that the NDB has been instructed by the Swiss government to monitor efforts by German tax-fraud investigators to approach potential whistleblowers working in the Swiss banking sector.

According to German media, the investigation against the three NDB officers was launched earlier this month. The news is likely to further complicate relations between Berlin and Bern. The two governments have been at loggerheads since the arrest of “Daniel M.”. Switzerland responded to the arrest by issuing arrest warrants for a number of German tax investigators. But Germany dismissed the move, saying it would refuse to comply with the warrants. On Monday, several European news media quoted German foreign minister Sigmar Gabriel, who described the alleged activities of the NDB as “incredible” and warned that the ongoing dispute between Germany and Switzerland could “wreck” their bilateral relationship.

Author: Joseph Fitsanakis | Date: 16 August 2017 | Permalink

American spies use US Federal Reserve to monitor foreign banks

Federal Reserve Bank of New YorkAmerican intelligence services have made use of a little-known confidentiality exception to spy on the financial activities of foreign banks who have accounts with the United States Federal Reserve, according to Reuters. Established in 1913, the Federal Reserve System is the central banking structure of the US. It oversees and regulates the nation’s financial institutions, and is tasked with —among other things— maintaining the stability of the American financial system. Additionally, however, the Federal Reserve offers a host of financial services to official (government-owned or sanctioned) foreign institutions. Thus, over 250 foreign banks (typically central banks) from dozens of countries have deposited nearly $3.3 trillion in assets at the Federal Reserve Bank of New York, one of 12 Federal Reserve Banks in the US. Depositing assets at a US Federal Reserve Bank, allows these foreign ‘depository institutions’ to use the US Federal Reserve as a ‘custodial institution’. Through it, they get direct and immediate access to American debt markets, where they can trade directly in dollars — the reserve currency of the global economy.

As one would expect, the ‘custodial services’ provided to foreign state banks by the US Federal Reserve are subject to strict confidentiality rules. However, according to a report published yesterday by Reuters, US intelligence agencies have found ways to circumvent these rules and monitor the activities of foreign banks who use the US Federal Reserve’s services. The news agency said it interviewed “more than a dozen current and former senior [Federal Reserve] and [US] Treasury [Department] officials”, including executives and division heads. It concludes that the US Intelligence Community has “leveraged the [US Federal Reserve’s] position at the center of global finance” to gain insights into the financial activities of foreign governments.

Specifically, the report alleges that American spies have made regular use of a little-known “need to know” exception clause to the US Federal Reserve’s confidentiality rules, and have been able to monitor the financial activities of selected foreign governments. These include Libya, Yemen, Iraq, China, Russia and Turkey, among others, says Reuters. In its report, the news agency says that the exception clause has been used at least seven times in the past 15 years. In some of these instances, the intelligence gathered led to “specific US responses” in relation to the financing of terrorism, or large-scale money-laundering. In other cases, the intelligence gathered helped Washington closely monitor market activity in areas of interest around the world, says Reuters.

The news agency contacted the New York Federal Reserve Bank, and was told by a spokesperson that the exception to the Federal Reserve’s confidentiality rules “has been used on rare occasions and on a limited basis”. These instances related to “issues as compliance with sanctions requirements and anti-money laundering principles”, said the spokesperson. The US government did not respond to calls for comments.

Author: Joseph Fitsanakis | Date: 27 June 2017 | Permalink

Swiss officials defend alleged spying on German tax-fraud investigators

SwitzerlandSenior Swiss government officials, including the defense minister and the director of the country’s intelligence agency, have defended Switzerland’s right to spy on European tax-fraud investigators who meddle in Swiss affairs. Earlier this week, German authorities announced the arrest of a Swiss national who was allegedly spying on the activities of German tax-fraud investigators in Frankfurt. According to German officials and media reports, the man, identified only as Daniel M., is an employee of the Swiss Federal Intelligence Service. The agency, known by its German-language initials, NDB, is Switzerland’s main intelligence organization.

As intelNews reported on Monday, Daniel M. was said to be monitoring the activities of German tax-fraud investigators who have been trying for years to stop German citizens from having secret bank accounts abroad. In the past decade, German authorities have paid nearly $100 million to employees of Swiss banks in return for information about the identities of German bank account holders in the small alpine country. The Swiss government has strongly criticized Berlin for encouraging Swiss banking sector employees to steal internal corporate information, a practice that goes against Switzerland’s stringent privacy laws. On Tuesday, Germany’s Foreign Minister, Sigmar Gabriel, summoned Switzerland’s ambassador to Germany, Christine Schraner Burgener, to the Foreign Ministry, in order discuss Daniel M.’s arrest. A press statement that the Foreign Ministry sent on Tuesday to the German media said that the meeting had been called “in the interest of German-Swiss friendship”.

But the Swiss do not appear to be interested in discussing. On Tuesday, Markus Seiler, Director of the NDB, defended his agency’s right to spy on anyone who “uses illegal methods in Switzerland to steal state or business secrets”. Seiler, who was speaking in Bern, classified all such practices as espionage targeting the the Swiss economy. Asked by reporters whether Daniel M. was an NDB employee, Seiler said he could not comment. But he defended the NDB’s right to “fight the theft of business secrets” and “uphold Swiss laws”. He also refused to specify whether the NDB is active in Germany, stating instead that the agency is “active at home and abroad”. Switzerland’s Minister of Defense, Guy Parmelin, who supervises the NDB’s activities, was equally general when asked to discuss the arrest of Daniel M. He said simply that he and other Swiss government officials had to “protect [the NDB’s] methods and sources”.

Author: Joseph Fitsanakis | Date: 04 April 2017 | Permalink

Germany arrests Swiss spy who was monitoring tax-fraud investigators

Frankfurt AirportAuthorities in Germany have announced the arrest of a Swiss national who was allegedly spying on the activities of German tax-fraud investigators in Frankfurt. According to prosecutors in the German state of Hesse, of which Frankfurt is the largest city, the Swiss man was arrested on Friday and is currently in custody. He has been identified only as Daniel M., and is believed to be in his mid-50s. According to news reports, German counterintelligence officers had been monitoring the suspect for over a year. They were issued a warrant for his arrest in December of last year, but waited until he was on German soil to arrest him. He was arrested at Frankfurt Airport.

German federal prosecutors said simply that Daniel M. was employed in the financial and banking sectors of Germany until early 2012. However after that time, he is believed to have been employed by “the intelligence service of a foreign power”. German officials refused to identify the “foreign power”. However, the Berlin-based German newspaper Die Welt said on Sunday that the Swiss man arrested on Friday is an employee of the Swiss Federal Intelligence Service. The agency, known by its German-language initials, NDB, is Switzerland’s main intelligence agency, tasked with safeguarding the security of the small alpine nation by collecting and analyzing information.

The question is, what was a Swiss spy doing in Germany, and why was he arrested? According to Die Welt, Daniel M. was monitoring the activities of German tax-fraud investigators who have been trying for years to stop German citizens from having secret bank accounts abroad. The German government believes that billions of euros are deposited by its citizens in banking institutions in European tax-havens like Liechtenstein, Switzerland or Monaco. For the past decade, German authorities have resorted to bribing whistleblowers in offshore banks in order to acquire internal documents that reveal the identities of German citizens who are hiding their money in foreign bank accounts. It is estimated that over a hundred million dollars have been paid to whistleblowers by German authorities since 2006. The latter argue that the proceeds collected from unpaid taxes and fines more than justify the payments made out to whistleblowers. But the Swiss government has strongly criticized Berlin for encouraging Swiss banking sector employees to steal internal corporate information that often breaks Switzerland’s stringent privacy laws.

It is believed that Daniel M. was arrested while monitoring efforts by German tax-fraud investigators to approach potential whistleblowers working in the Swiss banking sector. Soon after the Swiss man’s arrest, officers from Germany’s Federal Criminal Police Office (BKA) searched a hotel room, several apartments and a number of business premises in Frankfurt and nearby cities. It is worth noting that Frankfurt is a major global financial center, which also hosts the headquarters of the European Central Bank. If found guilty, Daniel M. could face up to 10 years in prison for espionage.

Author: Joseph Fitsanakis | Date: 01 May 2017 | Permalink