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CIA secretly OWNED encrypted code-making machines for decades allowing them to spy on governments


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The CIA secretly owned a Swiss company that ruled global spy communications for decades, enabling them to read messages from their allies and enemies in what an internal report called ‘the intelligence coup of the century’.

A joint investigation published Tuesday by Germany’s ZDF public broadcaster and The Washington Post, based on documents from the CIA and Germany’s BND foreign intelligence agency, revealed that Crypto AG made millions of dollars for the two agencies.

While the BND used the proceeds generated from the sale of cryptography devices to fund field operations, the CIA used the money to buy up rival companies and establish a quasi-monopoly for Crypto, Erich Schmidt-Eenboom, a German intelligence expert said. 

At the same time it provided them with access to the encrypted communications of more than 120 countries for decades as they reportedly sold secure models to friendly governments, and rigged systems for the rest of the world. 

The CIA secretly owned a Swiss company that ruled global spy communications for decades, enabling them to read messages from their allies and enemies. They reportedly sold secure models to friendly governments, and rigged systems for the rest of the world

Crypto AG made millions of dollars for the CIA and Germany's BND foreign intelligence agency, in what the CIA said in an internal report was 'the intelligence coup of the century'

Crypto AG made millions of dollars for the CIA and Germany’s BND foreign intelligence agency, in what the CIA said in an internal report was ‘the intelligence coup of the century’

While the BND used the proceeds generated from the sale of cryptography devices to fund field operations, the CIA used the money to buy up rival companies and establish a quasi-monopoly for Crypto. Swedish businessman and inventor of encryption machines, Boris Hagelin is pictured with one of his company's products, circa 1970

While the BND used the proceeds generated from the sale of cryptography devices to fund field operations, the CIA used the money to buy up rival companies and establish a quasi-monopoly for Crypto. Swedish businessman and inventor of encryption machines, Boris Hagelin is pictured with one of his company’s products, circa 1970

Crypto, whose products are still in use in more than a dozen countries, was liquidated in 2018 and the two companies that purchased most of its assets say they have no ongoing connection to any intelligence services.  

But the 96-page account of the operation, completed in 2004 by the CIA’s Center for the Study of Intelligence, raises questions about whether the US knew about global atrocities and failed to intervene in order not to expose their secret.

The report is also a 2008 complication of oral history from German intelligence officials.

Similar U.S. operations involving manipulated communications equipment were detailed by Edward Snowden, a former American intelligence employee once based in Geneva who leaked a large trove of intelligence documents in 2013. 

The new report claims the CIA operation was based out of a military installation used by American troops in Munich and later in the attic of a building adjacent to the U.S. Consulate.

The machines also fed Britain intelligence about Argentina's military during the Falklands War. Pictured, Royal Navy Westland Sea King HC.4 of 825 Naval Air Squadron takes off after transporting J Company, 42 Commando, Royal Marines from Port San Carlos to Darwin, June 1982

The machines also fed Britain intelligence about Argentina’s military during the Falklands War. Pictured, Royal Navy Westland Sea King HC.4 of 825 Naval Air Squadron takes off after transporting J Company, 42 Commando, Royal Marines from Port San Carlos to Darwin, June 1982

NSA director Bobby Ray Inman said that when the Carter administration questioned them about the how the Ayatollah Khomeinei regime was reacting to the latest messages in a deal to free 52 hostages in the US Embassy: 'We were able to respond to his questions about 85 percent of the time'

NSA director Bobby Ray Inman said that when the Carter administration questioned them about the how the Ayatollah Khomeinei regime was reacting to the latest messages in a deal to free 52 hostages in the US Embassy: ‘We were able to respond to his questions about 85 percent of the time’

It claims the National Security Agency controlled nearly every aspect of the operation and that eavesdropping targets were split into three areas; ‘A for the Soviets, B for Asia and G for virtually everywhere else’. 

The Washington Post report claims that by the early 1980s, more than half of the intelligence gathered by G group was going through Crypto machines.

They managed to take over from rivals with a 1970 deal from the machine’s creator Boris Hagelin – who was originally from Russia but fled to the states in 1940. 

He planned on passing the company down to his son, Bo. But Bo – who the CIA considered a ‘wildcard’, died in a car crash that was not considered suspicious.

‘Imagine the idea of the American government convincing a foreign manufacturer to jimmy equipment in its favor,’ the documents obtained by the Post, state. ‘Talk about a brave new world.’ 

Hagelin told only one member of the board, Sture Nyberg, about CIA involvement. They used code names for the operation and covered up ownership deals with the help of a law firm that created shell companies and contracts that required only the signature of a ‘bearer’ and not a specific name. 

Crypto AG encryption customers from the 1950s to 2000s 

Argentina

Austria

Algeria

Iran

Bangladesh

Brazil

Angola

Iraq

Burma

Czechoslovakia

India

Egypt

Chile

Jordan

Greece

Indonesia

Gabon

Colombia

Kuwait

Hungary

Japan

Ghana

Honduras

Lebanon

Ireland

Malaysia

Guinea

Oman

Mexico

Italy

Pakistan

Ivory Coast

Qatar

Nicaragua

Portugal

Philippines

Libya

Saudi Arabia

Peru

Romania

South Korea

Syria

Mauritius

Uruguay

Spain

Thailand

Morocco

U.A.E.

Venezuela

Turkey

Vietnam

Nigeria

Vatican City

Rep. of the Congo

Yugoslavia

South Africa

Sudan

Tanzania

Tunisia 

Zaire 

Zimbabwe

PLUS – United Nations 

 

The main adversaries of the U.S. in the Cold War, the Soviet Union and China, were never Crypto customers but other clients included Iran, India and Pakistan, military juntas in Latin America and the Vatican, the two outlets reported.

‘Foreign governments were paying good money to the U.S. and West Germany for the privilege of having their most secret communications read by at least two (and possibly as many as five or six) foreign countries,’ the CIA report from the 1970s states. 

The Post reports that ‘the Germans were taken aback by the Americans’ willingness to spy on all but its closest allies, with targets including NATO members Spain, Greece, Turkey and Italy’. 

Among other things, ZDF and the Post reported the spy agencies controlled nearly every aspect of the company’s operations from 1970 on. That allowed them to monitor Iran’s mullahs during the 1979 hostage crisis.

NSA director Bobby Ray Inman said that when the Carter administration questioned them about the how the Ayatollah Khomeinei regime was reacting to the latest messages in a deal to free 52 hostages in the US Embassy: ‘We were able to respond to his questions about 85 percent of the time.’

It also fed Britain intelligence about Argentina’s military during the Falklands War.

But when the country questioned the encryption device’s security, they claimed the NSA likely cracked an older machine used but the latest CAG 500 machine was ‘unbreakable’.

‘The bluff worked,’ the newly-released CIA history says. ‘The Argentines swallowed hard, but kept buying CAG equipment.’ 

Involvement of western spy agencies in Crypto had long been alleged. In 1992, a Crypto representative was arrested in Iran and spent months in prison before being released after the BND allegedly paid a $1 million dollar ransom.

The incident was one of the reasons why the German spy agency left the politically sensitive operation in 1993, he said.

The CIA history ends around the time Germany left the program, but evidence shows the program continued until 2004. 

The CIA owned Crypto until 2018. 

Swiss authorities said Tuesday they have opened an investigation into allegations a Zug, Switzerland-based maker of encryption devices was a front operated by the CIA and West German intelligence that enabled them to break the codes of the countries that used their products.

Swiss Defense Ministry spokeswoman, Carolina Bohren, told The Associated Press that ‘following research carried out by the media’ her office had notified the Cabinet about the Crypto case on November 5, 2019. On January 15, the decision was made to appoint a former supreme court judge to look into the reports and report back by the end of June.

‘The events under discussion date back to 1945 and are difficult to reconstruct and interpret in the present-day context,’ she said.

Schmidt-Eenboom cast doubt on the notion that the Swiss government wasn’t aware of Crypto’s true nature.

‘That’s not credible,’ he said. ‘They shut both eyes.

Germany’s BND refused to comment on the story.

Konstantin von Notz, a lawmaker with Germany’s Greens party who sits on the parliamentary committee that oversees the BND, told ZDF that he has asked for answers to questions raised by the report about the operation.

Egyptian President Anwar Al Sadat (1918 - 1981) (left) and US President Jimmy Carter talk together during the Egyptian-Israeli peace negotiations, on the porch of Aspen Lodge at Camp David, near Thurmont, Maryland, between September 5 and 17, 1978

Egyptian President Anwar Al Sadat (1918 – 1981) (left) and US President Jimmy Carter talk together during the Egyptian-Israeli peace negotiations, on the porch of Aspen Lodge at Camp David, near Thurmont, Maryland, between September 5 and 17, 1978

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