Ronald Regan handed Margaret Thatcher top secret hacked communications between Argentinian military commanders at the time of the Falklands conflict in 1982, new documents have shown.
The Central Intelligence Agency and the West German BND Federal Intelligence Service were running a major Swiss communications company which sold encryption equipment to governments around the world.
The company, Crypto, supplied equipment to 120 countries – including many in South America and India and Pakistan.
The CIA hacked Argentinian generals during the Falklands conflict in 1982 and handed the intelligence over to Britain, new documents have shown
The CIA and the German spy agency Bund had helped establish a Swiss encryption company, Crypto, pictured, following the Second World War. This company sold communication encryption equipment to governments around the world
US President Ronald Reagan, pictured at Camp David in Maryland with British Prime Minister Margaret Thatcher, authorised the CIA to hand over the top secret intercepts to London in 1982 to assist in the prosecution of the war
Officials in those governments were unaware that US and German spies had backdoor access into their communications systems.
According to the Washington Post, Margaret Thatcher was one of the beneficiaries of the intelligence.
The Argentinian junta relied on Crypto equipment which was being intercepted by US spies and passed onto the British.
Following the war, the Argentinian government was convinced, quite rightly, that their secure communications had been intercepted.
However, the CIA, using the front company, managed to convince them that it was an alternative system which was flawed, rather than the
According to the secret CIA history: ‘After the Falkland Islands War, the Argentines discovered that the British and Americans had broken their systems.
‘The furious Argentines summoned Henry (a Swedish maths professor named Kjell-Ove Widman, who ran the firm on behalf of the CIA and the German Bund) to Buenos Aires to explain.
‘The matter was not simple, said Henry, but it appeared that NSA had broken an analog speech system – these systems were notoriously weak, he said, but the CAG 500 systems were unbreakable. The bluff worked. The CAG equipment.’
The CIA has not confirmed the nature of the information passed between Washington and London.
Citing a classified internal CIA history of what was originally called operation ‘Thesaurus’ and later ‘Rubicon,’ the reports said that in the 1980s the harvest from the Crypto machines supplied roughly 40 percent of all the foreign communications US codebreakers processed for intelligence.
Meanwhile, the company took in millions of dollars in profits that went to the CIA and BND.
‘It was the intelligence coup of the century,’ the history says, according to the Washington Post.
‘Foreign governments were paying good money to the US 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 BND had no immediate reaction to the story. CIA spokesperson Timothy Barrett declined to comment on it.
Crypto AG was founded by Russian-born entrepreneur Boris Hagelin who fled Scandinavia to the United States in 1940 when the Nazis occupied Norway.
He had created a portable mechanical encryption machine that could be used in the field, Some 140,000 were produced for US troops during the war by the Smith Corona typewriter company in New York.
After the war Hagelin moved to Switzerland and began producing more advanced encryption machines American spies worried would allow governments everywhere to shield their communications.
But the premier US cryptologist, the National Security Agency’s William Friedman, persuaded Hagelin to restrict sales of his most advanced machines to countries approved by Washington, while older machines – with penetrable encryption – were sold to others.
When integrated circuits replaced mechanical encryption in the 1960s, the NSA helped Hagelin design new machines, which included coding that US cryptologists knew how to crack.
When Hagelin sought to retire, the United States headed off a French government effort to buy his company and arranged its own takeover.
In 1970, the US and Germany reached a deal to take it over for $5.75 million – with the stipulation that the French be excluded.
They then controlled virtually all Crypto AG’s operation, hiring the staff, designing the technology, and directing sales.
The intelligence operation underlying Zug-based Crypto Ag had long been suspected and was alluded to, but never proven, in documents that surfaced decades ago. The company’s true ownership was masked by front companies in Liechtenstein registries.
While scores of countries bought Crypto’s coding machines, the top Western adversaries, Russia and China, never trusted them.
Apparently nervous about being exposed and uncomfortable with the CIA’s aggressive targetting of both friends and rivals with Crypto machine sales, BND pulled out of the relationship and the CIA bought its shares in the 1990s.
Bernd Schmidbauer,former secret service coordinator for the German government, confirmed the story to ZTE.
‘The Rubicon operation clearly contributed to making the world a little safer,’ he said.
With online technology, including advanced encryption apps, now more powerful than the kind of machines that Crypto AG made, the CIA finally sold the company in 2018, the Post reported.
It was broken into two companies. Its Swiss-client business remained in Zug under the new name CyOne, and the international business and company name were taken over by Swedish investor Andreas Linde.
The Swedish company, Crypto International, called the news reports ‘very distressing.’
‘We have no connections to the CIA or the BND and we never had,’ the company said in a statement on its website.
‘We are currently assessing the situation and will be commenting once we have a full picture.’
Carolina Bohren, a Swiss Defense Ministry spokeswoman, said the government was informed of the Crypto AG case last November and has named a retired federal judge to investigate. Meanwhile the country has suspended export licenses for Crypto’s successor companies.
‘The events in question began in 1945 and are difficult to reconstruct and interpret today,’ Bohren said.