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

Britain warns its citizens following detention of alleged Russian spies in Switzerland

Davos SwitzerlandA Swiss newspaper has revealed a previously unreported detention of two Russian diplomats in the luxury Swiss Alpine resort of Davos, which is currently hosting the annual meeting of the World Economic Forum (WEF). The development prompted British authorities to warn some British citizens participating in the WEF meeting that they may be in physical danger.

The brief detention of the two Russians allegedly occurred in August of last year in Davos, a mountain resort in the canton of Graubünden, which is located in Switzerland’s eastern Alps region. According to the Swiss newspaper Tages-Anzeiger, local police detained two Russians during the period between August 8 and 28 of last year. Citing anonymous sources from the police and security services, the paper said that the authorities were alerted about the two Russians by employees at a local resort. The employees reportedly found it strange that the Russians had booked hotel rooms for over three weeks, which is unusually long for Davos’ ultra-luxury resort setting.

When police officers approached the two men and inquired about their background, one of them said he worked as a plumber. However, when asked to provide identification papers, both men reportedly produced Russian diplomatic passports. However, none had received accreditation by the Swiss government, which means they had not been formally registered as diplomats in the Alpine nation. When Swiss police officials contacted the Russian embassy in Bern to inquire about the two men, Russian officials “threatened diplomatic consequences if the men were arrested” said Tages-Anzeiger.

The two Russians were eventually released, as Swiss police “could not ascertain any reason to detain them”, said the paper. However, Swiss officials said that the two Russians “obviously […] had their sights on the WEF” and were probably planning to install surveillance equipment around the Swiss resort town. Soon after the Tages-Anzeiger report was published, British counterterrorism police reportedly warned a number of British citizens attending the WEF meeting that they might be in physical danger.

But the Russian embassy in Switzerland dismissed the Tages-Anzeiger report as “one more attempt to undermine Swiss-Russian relations”. Russian officials at the embassy accused Western countries of trying to “whip out a scandal out of nothing”, adding that Russian authorities had not been officially notified of the incident and that there was “no evidence of espionage” by the two men.

Author: Joseph Fitsanakis | Date: 22 January 2020 | Permalink

Allegations of espionage rock Credit Suisse, as more employees come forward

Credit SuisseCredit Suisse, one of the world’s most powerful banking firms, says it has opened an investigation into claims that it paid private investigators to spy at individuals, just two months after a similar scandal involving espionage and surveillance rocked the company.

In October of this year, two senior Credit Suisse executives resigned amidst a high-stakes espionage scandal, which may have prompted a suicide. The alleged target of the espionage was Iqbal Khan, the former Chief Executive Officer (CEO) of Credit Suisse’s wealth-management division. Khan alleged that he was spied on by private investigators, paid for by Credit Suisse, after leaving the firm. One of the private investigators involved in the case, described as “an external security expert” who mediated between Credit Suisse and the investigation firm, committed suicide.

At the time, Credit Suisse described the surveillance on Khan as “strictly an isolated incident”. However, on December 11, The Wall Street Journal published allegations by another Credit Suisse executive, Colleen Graham, who said that she had been spied on after leaving her job at the firm. She alleged that she underwent three days of intensive surveillance by persons unknown in July of 2017. Credit Suisse was dismissive of Graham’s claims, saying that they were baseless.

But on Wednesday the firm announced the launching of a new probe after a third employee, who used to work directly under Credit Suisse Chief Executive Officer Tidjane Thiam, alleged that he too had been spied on. The allegations were made by Peter Goerke, and were the subject of a headline article by the respected Swiss daily Neue Zürcher Zeitung. The article was accompanied by documents and photographs submitted by Goerke, which are said to support his claims.

There are now concerns that spying on former and current employees may have been a standard operating procedure at Credit Suisse. In an article published on Wednesday, The Wall Street Journal said that the alleged incidents “highlight the ethical and reputational pitfalls companies encounter when they physically monitor employees”.

Author: Joseph Fitsanakis | Date: 19 December 2019 | Permalink

Switzerland claims embassy worker was abducted by Sri Lankan security officers

Swiss embassy Sri LankaSwitzerland has filed a formal complaint after an employee of the Swiss embassy in Sri Lanka was allegedly abducted by men who forced her to divulge sensitive information about the embassy and its activities. The Swiss Ministry of Foreign Affairs said on Tuesday that the embassy employee was kidnapped by four men while walking in the Sri Lankan capital Colombo, on November 25. The men took her to what appeared to be a safe house and interrogated her for several hours.

The men eventually forced the Swiss embassy employee, who is a Sri Lankan national, to unlock her personal cell phone. According to Swiss government officials, they appeared to be looking for information about a senior Sri Lankan police detective who recently fled to Switzerland with his family and was granted political asylum. Some Sri Lankan media identified the man as Nishantha Silva, a police detective who until recently headed the Sri Lankan Criminal Intelligence Division’s Organized Crime Investigation Unit.

Silva is one of hundreds of members of Sri Lanka’s public sector who have fled abroad following the election of President Gotabaya Rajapaksa last month. The Rajapaksa family is one of the most powerful in the country, and has a long history of influencing Sri Lankan politics. Hours after assuming power, the ultra-nationalist Rajapaksa pledged to “hunt down” the leadership of the police and security services who investigated his family after 2015, when the Rajapaksas were ousted from the government. Hundreds of police and security officers have since been arrested or summarily fired.

On Tuesday, a Swiss Foreign Ministry spokesman told The New York Times that the Swiss government had verified the details of the abduction of its embassy worker. The spokesman added that the employee was forced to disclose “embassy-related information” after she was “threatened at length” by the men. The latter released her after warning her that she would be killed if she spoke to anyone about her ordeal.

On Monday, a spokesman for President Rajapaksa told reporters in Colombo that the Sri Lankan government questioned the accuracy of the Swiss embassy worker’s account of her abduction. Later, however, the Sri Lankan government announced that it had launched an investigation into the allegations. It now appears that the Sri Lankan government is preventing the embassy worker from leaving the country while the investigation into her claims is underway.

Author: Joseph Fitsanakis | Date: 04 December 2019 | Permalink

Espionage scandal prompts resignations of top Swiss banking executives

Credit SuisseTwo senior executives of Credit Suisse, one of the world’s most powerful banking firms, have resigned amidst a high-stakes espionage scandal that may have prompted a suicide and has shocked Switzerland. The alleged target of the espionage is Iqbal Khan, the former Chief Executive Officer (CEO) of Credit Suisse’s wealth-management division. The 43-year-old Khan moved to Switzerland from his native Pakistan at the age of 12. In 2013, after working for more than a decade as an auditor at Ernst & Young, he joined Credit Suisse. He quickly rose to head the institution’s wealth-management division and was credited with having nearly doubled its profits between 2016 and 2018.

Khan’s meteoric success brought him immense financial wealth. He soon bought a piece of property that is adjacent to the home of Tidjane Thiam, the 57-year-old CEO of Credit Suisse. Khan and his wife had the house on their property demolished and began a two-year project to build a new house. But the disruption caused by the large-scale construction project gave rise to a dispute between Thiam and Khan. Their rivalry escalated quickly and prompted the intervention of Credit Suisse board chairman Urs Rohner. However, the dispute between the two men was not resolved, and on July 1 of this year Khan left Credit Suisse. On August 29, Credit Suisse’s rival UBS announced that Khan would co-lead its global wealth management division.

It appears that some Credit Suisse executives were concerned that Khan might try to attract their firm’s customers to his new UBS portfolio. These concerns allegedly prompted Credit Suisse’s Chief Operating Officer (COO), Pierre-Olivier Bouee, to instruct the bank’s security department to keep tabs on Khan. The bank reportedly hired a private investigation firm, Investigo, to monitor Khan’s movements. There was an unexpected turn on September 17, when Khan noticed that he was being followed and promptly confronted an Investigo employee in downtown Zurich. On the same day, the former Credit Suisse star manager filed a complaint with the Zurich office of the Swiss Public Prosecutor.

On September 18, Credit Suisse gave orders to Investigo to stop keeping tabs on Khan. It also launched an internal investigation to evaluate the merits of the decision to spy on Khan. Meanwhile, the Swiss Public Prosecutor’s office announced that it had opened a criminal case on Investigo and had arrested three individuals in connection with the case. On September 24, a private investigator, who is believed to have been involved in Khan’s case, committed suicide. Media reports said the unidentified man was “an external security expert” who mediated between Credit Suisse and Investigo.

On Tuesday, Credit Suisse COO Bouee announced his resignation. Swiss media said the head of the bank’s global security division also resigned. Also on Tuesday, Credit Suisse’s internal investigation found that CEO Thiam had not been involved in the decision to spy on Khan.

Author: Joseph Fitsanakis | Date: 02 October 2019 | Permalink

Swiss to extradite brother of ‘leading biochemist’ who spied for Chinese firm

GlaxoSmithKlineA Swiss court has ordered the extradition to the United States of the brother of one of the world’s leading biochemists, who spied on a British pharmaceutical firm to help a Chinese startup. The extradition is part of a large corporate espionage case centered on Yu Xue, a Chinese scientist described by US federal prosecutors as “one of the world’s top protein biochemists”. Yu specializes in drug research for cancer and other serious terminal illnesses. From 2006 until 2016 he worked in the US for GlaxoSmithKline (GSK), a leading British pharmaceutical group.

In 2018, Yu was arrested by US authorities for stealing trade secrets from a GSK research facility in the US state of Pennsylvania, and giving them to a Chinese startup pharmaceutical company called Renopharma. He eventually pleaded guilty to stealing proprietary data from GSK, in a case that the US Department of Justice described as a textbook example of Chinese “economic warfare” against America. US government prosecutors also claim that Renopharma is almost wholly funded the Chinese government. The three co-founders of the Chinese firm have also been charged with corporate espionage targeting a US firm.

On May 28 Yu’s brother, Gongda Xue, was arrested in Basel, Switzerland. According to the US government, Gongda used GSK data stolen by his brother to carry out drug experimentation at the Friedrich Miescher Institute for Biomedical Research, where he worked as a post-doctoral trainee between 2008 and 2014. On Tuesday, the Swiss Federal Office of Justice (FOJ), ruled in favor of a request by the US government to extradite Gongda so he can be tried in Pennsylvaia. According to the FOJ, the Chinese scientist will be extradited as soon as his 30-day appeal period expires.

Author: Ian Allen | Date: 17 July 2019 | Permalink