Switzerland has opened a probe after reports that US and German intelligence services reportedly spent decades plundering the top-secret communications of governments around the world.
The CIA and German intelligence agency BND secretly ran a Swiss encryption company, Crypto AG, that sold devices to more than 100 governments around the world.
The Swiss company made and sold code-making equipment to Iran, India, Pakistan, Latin American nations and dozens of other countries. It was a top supplier of devices for encrypting communications from after the Second World War until the beginning of this century.
Unknown to all the governments using Crypto to encrypt their internal communications, the company was secretly owned by the CIA and BND.
Together, the US and Germany rigged the equipment so they could easily crack the encryption codes and read other governments' messages, according to reports by the Washington Post and German and Swiss television.
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 per cent of all the foreign communications US code breakers 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 CIA history file says, reported 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 spokesman Timothy Barrett declined to comment on the reports.
Crypto 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 rudimentary portable encryption machine that could be used in the field. About 140,000 were produced for US troops during the Second World War by the Smith Corona typewriter company in New York.
After the war, Hagelin moved to Switzerland and began producing more advanced encryption machines, raising concern among American spies who worried it 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 those not on the list.
When integrated circuits replaced mechanical encryption in the 1960s, the NSA helped Hagelin design new machines that included coding 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 (Dh21m) – with the stipulation that the French be excluded.
This sale gave the US and Germany control over almost all of Crypto AG’s operation, hiring the staff, designing the technology and directing sales.
The intelligence operation underlying Zug-based Crypto had long been suspected and alluded to, but never proven. The company’s true ownership was masked by front companies in Liechtenstein registries.
While scores of countries bought Crypto’s coding machines, the West’s top adversaries, Russia and China, never trusted them.
Apparently nervous about being exposed, and uncomfortable with the CIA’s aggressive targeting 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 the advent of online technology, including advanced encryption apps that are now more powerful than the type of encryption machines Crypto AG made, the CIA sold the company in 2018, the Washington Post reported.
It was broken into two parts. 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 Defence 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 licences for Crypto’s successor companies.
“The events in question began in 1945 and are difficult to reconstruct and interpret today,” Ms Bohren said.
Will the pound fall to parity with the dollar?
The idea of pound parity now seems less far-fetched as the risk grows that Britain may split away from the European Union without a deal.
Rupert Harrison, a fund manager at BlackRock, sees the risk of it falling to trade level with the dollar on a no-deal Brexit. The view echoes Morgan Stanley’s recent forecast that the currency can plunge toward $1 (Dh3.67) on such an outcome. That isn’t the majority view yet – a Bloomberg survey this month estimated the pound will slide to $1.10 should the UK exit the bloc without an agreement.
New Prime Minister Boris Johnson has repeatedly said that Britain will leave the EU on the October 31 deadline with or without an agreement, fuelling concern the nation is headed for a disorderly departure and fanning pessimism toward the pound. Sterling has fallen more than 7 per cent in the past three months, the worst performance among major developed-market currencies.
“The pound is at a much lower level now but I still think a no-deal exit would lead to significant volatility and we could be testing parity on a really bad outcome,” said Mr Harrison, who manages more than $10 billion in assets at BlackRock. “We will see this game of chicken continue through August and that’s likely negative for sterling,” he said about the deadlocked Brexit talks.
The pound fell 0.8 per cent to $1.2033 on Friday, its weakest closing level since the 1980s, after a report on the second quarter showed the UK economy shrank for the first time in six years. The data means it is likely the Bank of England will cut interest rates, according to Mizuho Bank.
The BOE said in November that the currency could fall even below $1 in an analysis on possible worst-case Brexit scenarios. Options-based calculations showed around a 6.4 per cent chance of pound-dollar parity in the next one year, markedly higher than 0.2 per cent in early March when prospects of a no-deal outcome were seemingly off the table.
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8 UAE companies helping families reduce their carbon footprint
Greenheart Organic Farms
This Dubai company was one of the country’s first organic farms, set up in 2012, and it now delivers a wide array of fruits and vegetables grown regionally or in the UAE, as well as other grocery items, to both Dubai and Abu Dhabi doorsteps.
www.greenheartuae.com
Modibodi
Founded in Australia, Modibodi is now in the UAE with waste-free, reusable underwear that eliminates the litter created by a woman’s monthly cycle, which adds up to approximately 136kgs of sanitary waste over a lifetime.
www.modibodi.ae
The Good Karma Co
From brushes made of plant fibres to eco-friendly storage solutions, this company has planet-friendly alternatives to almost everything we need, including tin foil and toothbrushes.
www.instagram.com/thegoodkarmaco
Re:told
One Dubai boutique, Re:told, is taking second-hand garments and selling them on at a fraction of the price, helping to cut back on the hundreds of thousands of tonnes of clothes thrown into landfills each year.
www.shopretold.com
Lush
Lush provides products such as shampoo and conditioner as package-free bars with reusable tins to store.
www.mena.lush.com
Bubble Bro
Offering filtered, still and sparkling water on tap, Bubble Bro is attempting to ensure we don’t produce plastic or glass waste. Founded in 2017 by Adel Abu-Aysha, the company is on track to exceeding its target of saving one million bottles by the end of the year.
www.bubble-bro.com
Coethical
This company offers refillable, eco-friendly home cleaning and hygiene products that are all biodegradable, free of chemicals and certifiably not tested on animals.
www.instagram.com/coethical
Eggs & Soldiers
This bricks-and-mortar shop and e-store, founded by a Dubai mum-of-four, is the place to go for all manner of family products – from reusable cloth diapers to organic skincare and sustainable toys.
www.eggsnsoldiers.com
Citizenship-by-investment programmes
United Kingdom
The UK offers three programmes for residency. The UK Overseas Business Representative Visa lets you open an overseas branch office of your existing company in the country at no extra investment. For the UK Tier 1 Innovator Visa, you are required to invest £50,000 (Dh238,000) into a business. You can also get a UK Tier 1 Investor Visa if you invest £2 million, £5m or £10m (the higher the investment, the sooner you obtain your permanent residency).
All UK residency visas get approved in 90 to 120 days and are valid for 3 years. After 3 years, the applicant can apply for extension of another 2 years. Once they have lived in the UK for a minimum of 6 months every year, they are eligible to apply for permanent residency (called Indefinite Leave to Remain). After one year of ILR, the applicant can apply for UK passport.
The Caribbean
Depending on the country, the investment amount starts from $100,000 (Dh367,250) and can go up to $400,000 in real estate. From the date of purchase, it will take between four to five months to receive a passport.
Portugal
The investment amount ranges from €350,000 to €500,000 (Dh1.5m to Dh2.16m) in real estate. From the date of purchase, it will take a maximum of six months to receive a Golden Visa. Applicants can apply for permanent residency after five years and Portuguese citizenship after six years.
“Among European countries with residency programmes, Portugal has been the most popular because it offers the most cost-effective programme to eventually acquire citizenship of the European Union without ever residing in Portugal,” states Veronica Cotdemiey of Citizenship Invest.
Greece
The real estate investment threshold to acquire residency for Greece is €250,000, making it the cheapest real estate residency visa scheme in Europe. You can apply for residency in four months and citizenship after seven years.
Spain
The real estate investment threshold to acquire residency for Spain is €500,000. You can apply for permanent residency after five years and citizenship after 10 years. It is not necessary to live in Spain to retain and renew the residency visa permit.
Cyprus
Cyprus offers the quickest route to citizenship of a European country in only six months. An investment of €2m in real estate is required, making it the highest priced programme in Europe.
Malta
The Malta citizenship by investment programme is lengthy and investors are required to contribute sums as donations to the Maltese government. The applicant must either contribute at least €650,000 to the National Development & Social Fund. Spouses and children are required to contribute €25,000; unmarried children between 18 and 25 and dependent parents must contribute €50,000 each.
The second step is to make an investment in property of at least €350,000 or enter a property rental contract for at least €16,000 per annum for five years. The third step is to invest at least €150,000 in bonds or shares approved by the Maltese government to be kept for at least five years.
Candidates must commit to a minimum physical presence in Malta before citizenship is granted. While you get residency in two months, you can apply for citizenship after a year.
Egypt
A one-year residency permit can be bought if you purchase property in Egypt worth $100,000. A three-year residency is available for those who invest $200,000 in property, and five years for those who purchase property worth $400,000.
Source: Citizenship Invest and Aqua Properties
Juliet, Naked
Dir: Jesse Peretz
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Mohammed bin Zayed Majlis
Specs
Engine: Duel electric motors
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