Spy sting: Few at the Swiss factory knew the mysterious visitors were pulling off a stunning intelligence coup -- perhaps the most audacious in the National Security Agency's long war on foreign codes


No Such Agency


Zug, Switzerland -- For four decades, the Swiss flag that flies in front of Crypto AG has lured customers from around the world to this company in the lake district south of Zurich.

Countries shopping for equipment to encode their most sensitive diplomatic and military communications value Switzerland's reputation for business secrecy and political neutrality. Some 120 nations have bought their encryption machines here.

But behind that flag, America's National Security Agency hid what may be the intelligence sting of the century. For years, NSA secretly rigged Crypto AG machines so that U.S. eavesdroppers could easily break their codes, according to former company employees whose story is supported by company documents.

The value to NSA of such an intelligence windfall is hard to exaggerate. For NSA effortlessly to read coded messages between top officials of many countries is the equivalent of recruiting reliable spies in key government posts around the world, receiving minute-by-minute reports from them and never risking that they will be unmasked.

NSA appears to have pulled off an international sleight of hand as brazen and brilliant as the original Trojan horse by winning the covert cooperation of the Swiss firm. Wary of encryption companies in NATO countries, the suspicious governments of such prime U.S. targets as Iran, Iraq, Libya and Yugoslavia bought equipment from Crypto AG (or Crypto Inc.). They never )) imagined that when they coded their messages with the Swiss (( machines, they may have been sending an easily unscrambled copy directly to NSA headquarters at Fort Meade.

Many details of the arrange ments between Crypto and NSA are not known, including when the rigging began, whether it has ended and which machines were involved. The whole story will be told only when secret U.S. documents are declassified, probably well into the next century.

Crypto rejects the rigging allegations as an invention by disgruntled former employees and denies that its machines were ever designed or altered according to the suggestions of American spies. After reports of cooperation with Western intelligence surfaced in the Swiss press last year, the company wrote to its customers that "manipulation of Crypto AG equipment is absolutely excluded."

But a different tale is told by an accumulation of evidence, including a document obtained by The Sun showing that an NSA cryptographer attended a meeting with Crypto personnel to discuss the design of new machines.

The extraordinary story of Crypto AG is only one example of NSA's 40-year campaign to bypass, break or steal the foreign codes that are the main obstacle to the agency's eavesdropping.

The contest between code-makers and code-breakers dates back many centuries. But NSA has taken the game to unprecedented levels of effort, expenditure and deception.

The agency has amassed the world's largest concentration of supercomputers to produce the number-crunching power necessary to break foreign codes. It has dispatched FBI agents on break-in missions to snatch code books from foreign facilities in the United States, and CIA agents to recruit foreign communications clerks and buy their code secrets, according to veteran intelligence officials.

The agency has imposed secrecy orders on U.S. scientists to prevent them from publishing code-making breakthroughs that might be exploited abroad. It has designed the so-called Clipper chip, an encryption device that would scramble telephone calls to foil eavesdroppers - except FBI and NSA agents with a warrant, who could obtain the secret numeric "keys" to unlock the code.

And NSA has pressured American encryption companies to rig their own machines to permit U.S. eavesdropping, as Crypto is alleged to have done, in return for the export licenses the agency controls.

Today, NSA's need for rigged machines and pilfered code books is greater than ever. An era of inexpensive, virtually unbreakable encryption appears to be imminent. The ancient art of using codes to keep secrets is spreading beyond governments to banks, multinational corporations, drug cartels and terrorist groups.

"The window that the U.S. has had to read the communications of other countries is closing," says Stephen T. Walker, a software engineer who began his career at NSA and whose company sells encryption programs. "The advent of electronic communications opened that window. In World War II, it was incredibly valuable. But technology is closing that window," he says.

In an ironic turnabout, technologies NSA practically invented, in codes, computers and communications, now threaten its mission.

Fiber-optic cable is rapidly replacing microwave transmission as the favored route for telephone traffic. While a microwave dish or satellite can easily pluck messages from the air, tapping fiber usually requires physical placement of a bug. That's impractical on the scale of NSA's global net.

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