Crypto AG

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Group.png Crypto AG   WebsiteRdf-icon.png
Crypto AG.png
Formation 1920
Founder Arvid Gerhard Damm
Headquarters Steinhausen (Canton of Zug), Switzerland
Owners unknown
Manufacturers of notoriously backdoored cryptographic communication systems.

Crypto AG is a long established Swiss manufacturer of encryption machines and cypher devices that were backdoored to enable easy decryption by the US National Security Agency (NSA) and GCHQ[1] .[2]

In July 2015, UN Secretary-General Ban Ki-moon endorsed a newly-published report by a UN Panel of Experts into the 1961 plane crash in which Dag Hammarskjöld was killed, and called for a fresh inquiry. The report said the panel had learned that the cryptographic machine used by UN Secretary-General Hammarskjöld had been “intentionally designed” to allow the NSA and “other select intelligence agencies” to listen in.[3]

History

Crypto AG has about 230 employees and, with offices in Abidjan, Abu Dhabi, Buenos Aires, Kuala Lumpur, Muscat, Selsdon and Steinhausen, does business throughout the world.[4] The beneficial owner(s) of Crypto AG are unknown, supposedly even to the managers of firm, and they hold their ownership through bearer shares.[5]

Originally called AB Cryptoteknik and founded by Arvid Gerhard Damm in Stockholm in 1920, the firm manufactured the C-36 mechanical cryptograph machine that Damm had patented. After Damm's death, and just before World War II, Cryptoteknik came under the control of Russian-born Swede, Boris Hagelin, an early investor, and during the War essentially operated in the United States, where 140,000 units were made under licence as C-38. After the war, Sweden passed laws classifying cipher machines as munitions which could not be exported so in 1952 Boris Hagelin moved his new company, Crypto AG, to Zug in Switzerland.

Crypto AG then launched the C-52 and CX-52 cipher machines, with a stronger encipherment than the previous models. The handheld CD-57 was added in 1957 for clandestine operations and was compatible with the CX-52. These machines would go on to be the most successful cipher machines ever produced, selling to 120 countries around the world. These were used for the most sensitive military, diplomatic and financial messages with complete confidence of the users based on the trust of a Swiss bank and the precision engineering of a Swiss watch.[6]

Intelligence coup

What the users of these Hagelin machines did not know was the single greatest coup in the history of military intelligence. In 1957, William Friedman was called out of retirement by America's National Security Agency (NSA) to make a secret deal with Boris Hagelin, giving the US access into all the secret communications using Crypto AG machines. The US shared this information with British intelligence. Later, as the cipher technology advanced from mechanical devices to electronics, the new Hagelin machines installed a "back door" written by the NSA. Hostile dictators such as the Iranian Islamic regime, Saddam Hussein, Muammar Gaddafi, Ferdinand Marcos, Idi Amin, as well as friendly nations and the Vatican all had their most secret communications read instantly by Washington and London. This unfettered access would continue for decades.

Leaked to Israel

This open book into the world's secrets started to unravel in 1983, when a US Naval Intelligence officer, Jonathan Pollard, acting as an Israeli spy sold this highly classified information (well above top secret) to Israel. This sensitive information was then traded to the Soviet Union in return for them allowing more Soviet Jews to emigrate to Israel. The rest of the world remained oblivious to the espionage battles over the Hagelin cipher machines and continued to use them. It turns out the Russians probably already knew this secret from two other US spies, Aldrich Ames and Robert Hanssen.

Bugging Gaddafi

Suspicions that Israel could decipher Crypto AG machines were aroused in 1986 following US president Ronald Reagan's announcement on national television that, through interception of diplomatic communications between Tripoli and the Libyan embassy in East Berlin, he had irrefutable evidence that Muammar Gaddafi of Libya was behind the 1986 Berlin discotheque bombing in which two US service personnel were killed and another fifty injured. President Reagan then ordered the bombing of Tripoli and Benghazi in retaliation. Press speculation suggested that Israel was the source of the "intercepted" message from Libya.[7]

Lockerbie "strands"

On 28 March 2015, it was reported that nearly half a dozen investigative “strands” tied to the sabotage of Pan Am Flight 103 were related to Crypto AG projects, which had security protocols tagging all encrypted messages with a built-in hack and redirecting them to the Mossad for evaluation and "valuation".[8]

Open secret

In March 1992 Hans Buehler[9] the top salesman for Crypto AG was arrested in Iran and charged with spying for the US and Germany by selling cipher machines with the hidden back door. Buehler was not aware of the secret deal between Hagelin and the NSA, so he maintained his innocence and Crypto AG's integrity for 9 months. He was finally released after Crypto AG and Siemens agreed to pay a million dollar ransom.[10] Siemen's role in the ransom furthered speculation that Crypto AG was secretly partnered with that German company, with close ties to German intelligence.[11]

Within weeks of his return to Switzerland, Buehler was fired by Crypto AG and was billed for his million dollar ransom.[12] He went on to discover the truth of the secret NSA deal from previously tight-lipped employees and wrote a book about his ordeal and discoveries. Crypto AG sued Buehler but settled out of court before the Crypto AG engineers could testify about their knowledge of the NSA deal. Buehler was released in January 1993 and despite claims of innocence from Crypto AG, sales plummeted. Crypto AG rejected these accusations as "pure invention", asserting in a press release that "in March 1994, the Swiss Federal Prosecutor's Office initiated a wide-ranging preliminary investigation against Crypto AG, which was completed in 1997. The accusations regarding influence by third parties or manipulations, which had been repeatedly raised in the media, proved to be without foundation." Subsequent commentators are unmoved by this denial, stating that it is likely that Crypto AG products were indeed rigged.[13][14][15][16] The three and a half decades of NSA access to the world's secrets came to a grinding halt as more countries understood the scope of the deception.

Enter Marc Rich

With Crypto AG sales and stock price in free-fall, the fugitive sanctions-busting oil billionaire and Mossad agent, Marc Rich came into the picture as an angel investor. So the back door lost by the NSA was soon to be reprogrammed for Marc Rich and his Israeli contacts. This was an important deal for US tax exile Marc Rich, who happened to have lived for the previous 20 years in or near Zug, a town of about 25,000 in central Switzerland and the headquarters of Crypto AG. In the hours before Bill Clinton left office on 20 January 2001, a deal was struck granting a pardon for Marc Rich which was controversial for several reasons. Marc's then wife, Denise Rich, spent the night in the White House during Clinton's last night in office, and contributed a total of $1.3 million to the US Democratic Party and the Clinton Library.[citation needed]

The deal for Marc Rich's pardon was made by his attorney and the future Chief of Staff for Vice President Dick Cheney, "Scooter" Libby. Libby would go on to be convicted of four felonies and disbarred for leaking CIA agent Valerie Plame's name, ruining her career and jeopardising secret US operations for strictly political purposes. Plame's husband, ambassador Joe Wilson, was openly critical of the Bush administration claims of weapons of mass destruction as the reason to attack Iraq and Saddam Hussein the second time. After serving one month of a 30-month sentence, Libby's sentence was commuted by President George W. Bush. This would be a source of friction between Cheney and Bush, as Cheney wanted Libby to be pardoned. Many believe Libby took the fall for his boss, Vice President Cheney.[17]



References

  1. http://www.bbc.com/news/uk-33676028
  2. "Crypto AG: The NSA's Trojan Whore"
  3. "U.N. Chief Calls for New Inquiry Into 1961 Plane Crash That Killed Dag Hammarskjold"
  4. "Headquarters and regional offices worldwide". Crypto AG. Retrieved 2008-01-06. 
  5. Leo Müller. "Espionage: A Spooky Cooperation" (PDF). Bilanz. 
  6. "Hagelin Ciphers"
  7. "Israel’s Mossad was almost certainly responsible for the bombing of the La Belle disco in West Berlin on April 5, 1986 in which 2 American servicemen died"
  8. "The Crash: Coming into Focus"
  9. http://www.zoominfo.com/p/Hans-Buehler/5988090
  10. Schneier, Bruce (2004-06-15). "Breaking Iranian codes". Crypto-Gram newsletter. 
  11. ""Wer ist der befugte Vierte?" Geheimdienste unterwandern den Schutz von Verschlüsselungsgeräten". Der Spiegel (in German). 1996-09-02. 36/96. 
  12. Shane, Scott; Tom Bowman (1997-03-08). "No Such Agency, part four: Rigging the game". The Baltimore Sun. pp. 9–11. 
  13. De Braeckeleer, Ludwig (2007-12-29). "The NSA-Crypto AG Sting". OhmyNews. 
  14. Grabbe, J. Orlin (1997-11-02). "NSA, Crypto AG, and the Iraq-Iran conflict". Archived from the original on 2007-06-07. 
  15. Schneier, Bruce (2008-01-11). "NSA Backdoors in Crypto AG Ciphering Machines". Schneier on Security blog. 
  16. Baranyi, Laszlo (1998-11-11). "The story about Crypto AG". 
  17. "NS business profile: Marc Rich, Glencore's fugitive founder"
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