The CIA used a Swiss company to spy on over 100 countries

A spy scandal has rocked Switzerland. For decades, US and German intelligence surreptitiously harnessed Swiss technology to snoop on a multitude of countries. Did the Swiss government turn a blind eye?

Mechanical encryption machine dating back to 1952 – the year Crypto AG was established. Crypto remained a market leader during the digital era. Photo: Keystone

Crypto representative Hans Bühler, pictured here following his release from an Iranian prison in 1993, suspected his company of cooperating with foreign intelligence services. Photo: Keystone

Ostensibly, Zug-based Crypto AG was a respectable Swiss company and technology leader. It had a very niche specialisation in encryption devices. These products were sold to countries whose armies and intelligence services wanted to hide confidential communications from prying eyes.

However, Crypto AG was anything but a normal Swiss company adhering to normal Swiss values. Its business – cryptic in the truest sense – was secretly owned by the CIA and its West German counterpart, the BND, from 1970 onwards. Both intelligence agencies were able to introduce back doors in the company’s supposedly uncrackable Swiss-made encryption systems.

Through their deliberate manipulations, the CIA and BND were able to eavesdrop on 148 countries – both friend and foe – for decades. All these countries invested millions in Crypto’s rigged devices, believing that they were getting trustworthy technology from neutral Switzerland when in fact they were paying for the dubious pleasure of being spied on.

The revelations became public in mid-February of this year – the result of a joint investigation by Swiss television (SRF), German broadcaster ZDF, and the “Washington Post”, based firstly on leaked CIA documents and, secondly, on interviews with former Crypto AG employees and their families.

The “intelligence coup of the century” – as the CIA called it – evidently has far-reaching implications. It turns a spotlight on the tension-filled Cold War era, with the extent of the CIA/BND collusion casting new light on many historical events of the last 50 years. However, the extent to which recent world history needs rewriting will only become clear once the Crypto affair has been thoroughly digested. The question of whether Switzerland needs to redraft its own history is generating discussion. After all, what did the Swiss government know about what was going on? Was our country hosting foreign intelligence activities but keeping them deliberately secret?

“The programme exceeded our wildest expectations”

How successful were the CIA and BND in manipulating Crypto’s Swiss systems for their own intelligence purposes, and what impact did their actions have? The effectiveness of spying always mirrors the amount of damage caused to the party being spied on. It is all a question of perspective. According to leaked sources, the CIA saw it as the “most productive and longest-running intelligence project since the Second World War”. It allowed 80 to 90 per cent of Iran’s confidential communications to be intercepted. According to the CIA: “The programme exceeded our wildest expectations.”

Wiretapping enabled the USA in particular to influence the outcome of almost every major conflict in its favour. For example, decryption records now show that the CIA supported the 1973 military coup in Chile. The CIA and BND also monitored communications within the military junta and knew from the outset about the persecution and torture that cost 30,000 opponents of the regime their lives.

Some initial questions and answers

The Crypto AG revelations have caused quite a stir, although it is too early to predict the full fallout. The following key questions outline the implications for Switzerland:

Why did the CIA and BND use a Swisscompany?

Swedish cryptologist Boris Hagelin established Crypto AG in 1952. Hagelin deliberately chose to base the business in Switzerland because, as the CIA source notes: “When one was engaged in a sensitive business like cryptography, better to seek the protection of a neutral country with fewer moral scruples.” Hagelin sold Crypto to a front company of the CIA and BND in 1970.

The CIA and BND were the ones who were spying. Why is this being viewed in Switzerland as a ‘Swiss’ scandal?

The issue for Switzerland centres on what the federal government knew about the motives, methods and extent of the spying, and whether it tolerated or even facilitated what the two intelligence agencies were doing.

Suspecting at the time that foreign powers had tampered with their prized technology, Crypto employees in Switzerland involved the authorities. What happened next?

It is documented that an employee of Crypto AG told the authorities in the mid-1970s that the products sold by his company had, according to a file entry in the Swiss Federal Archives dated 24 July 1977, been fitted with “manipulated key generators that allowed West Germany and the USA to decode messages”. Embarrassingly, part of this record has since disappeared.

Switzerland’s federal police looked into the allegations at the time but found no proof of wrongdoing. Witnesses of that era now lament the fact that police inquiries were merely pro forma in nature.

Isn’t the whole affair just a relic of the Cold War?

It was in the mid-1970s that doubts were first raised. Former Crypto employee Hans Bühler openly accused the company of cooperating with foreign intelligence services (Bühler, who spent nine months in an Iranian jail on suspicion of spying, made the allegations in his 1994 book “Encrypted”). However, it is only now that we see the full implications after information from CIA sources recently came to light. The snooping also continued far beyond the Cold War until 2018, albeit without German involvement: the BND left the programme in 1993 as a result of German reunification.

To what extent was the Federal Council complicit in the affair, if at all?

This is a key question. How much the Federal Council knew about the conspiracy is still anyone’s guess. CIA documents mention former Federal Councillor Kaspar Villiger (FDP) as one of those who were aware of what was going on. Villiger, now 79, has strenuously denied any knowledge.

Why does the issue of whether the Federal Council knew about the spying carry so much weight?

If it turns out that the Federal Council – or individual Federal Councillors – knew about the surveillance, then it begs some other serious questions. Did the Federal Council turn a blind eye to CIA spying, or did it try to cover it up? Did the Federal Council resign itself to foreign entities taking advantage of Swiss neutrality? And if Switzerland was indeed complicit, turned a blind eye or deliberately covered it up– how does spying against warring states square with Swiss neutrality?

How have the Federal Council and parliament reacted to the affair?

The President of the Swiss Confederation, Simonetta Sommaruga, has said from the outset that her government will look at all the facts and would welcome an investigation. Defence Minister Viola Amherd has also confirmed that her department possesses documents suggesting complicity on the part of predecessor Kaspar Villiger. The parliamentary control body will now examine the allegations in order to find out what Switzerland knew about the espionage – and whether the Swiss intelligence service may even have benefited.

To what extent does the ‘Crypto leaks’ scandal jeopardise Switzerland’s current role?

Switzerland mediates in many conflicts, offering its ‘good offices’ in some of the world’s most geopolitically tense regions. For example, it is currently acting as an intermediary in the US-Iran crisis. Switzerland can only play this diplomatic role if its credibility as a neutral state is intact. This credibility is precisely what is at stake. It was the Iranians, incidentally, who were particularly spied on via the rigged Swiss devices sold to them by Crypto representative Hans Bühler.

The Americans and Germans spied. Why does this damage Switzerland’s reputation?

It remains to be seen how much of a hit Switzerland’s image abroad has taken, but how Switzerland sees itself has certainly been affected. The neutrality that so many Swiss hold dear has been damaged. The scandal could make a mockery of Swiss neutrality (see the opinion piece on page 15).

Credibility, trust and self-image are all soft factors. Will the revelations negatively affect any tangible economic interests?

Switzerland’s technology sector is on the up. This, too, is reliant on the country having a credible image. Furthermore, Switzerland wants to position itself as a squeaky clean digital innovation hub and is pushing for an international initiative to promote ethical standards. The Crypto affair could not have come at a worse time.

Furthermore: Comment by journalist Patrick Feuz on the topic

Further information

Documentary on Swiss television (SRF): ogy.de/crypto

Hans Bühler / Res Strehle: “Encrypted – the case of Hans Bühler”, Wird & Weber-Verlag, new edition 2020; ISBN 978-3-03922-044-1

Comments (8)
  • Ruth Elisabeth Kelly-Hager, Canada
    Ruth Elisabeth Kelly-Hager, Canada at 26.05.2020
    When I read the phrase "neutral country with fewer moral scruples" I was appalled. Canada's Prime Minister is trying hard to keep this country separate from the USA as far as political beliefs, and although there are multitudes of honest and fair people in the USA, Trump has his own cache of dubious followers. Please know that the large majority wants to keep Switzerland neutral, free and we do not question the integrity of the Swiss, nor the scruples of their/our Government.

    Ruth Elisabeth Kelly-Hager, Swiss National living in Canada
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  • Arnold Huber, Los Angeles, USA (originally from Luzern, Switzerland)
    Arnold Huber, Los Angeles, USA (originally from Luzern, Switzerland) at 28.05.2020
    I don't think this is solely a Swiss problem. This is an international situation. Criminals do break the laws of the land, and the CIA for one sure broke not only the laws but simply betrayed the trust of this Swiss Company. That's simply Treason. As a note, President Trump has taken more than one attempt to reorganize the CIA since he came into office. I am a "deplorable" Trump follower and I don't care. If William Tell was in the USA today I can guarantee you he would be a "deplorable", too. Simply because he stands for Liberty, Freedom of Speech and the Right to Bear Arms. And so do I.
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    • Warren Smith, Geneva, Switzerland
      Warren Smith, Geneva, Switzerland at 28.05.2020
      It definitely is a Swiss problem if the authorities were aware (which seems to be the case, since a federal investigation took place in the 70's). This clearly goes counter one of the core values of the brand "Switzerland", that of neutrality.

      As for Trump, you're probably correct, his morals are certainly as primitive as those of William Tell...
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  • Eric Frieden
    Eric Frieden at 28.05.2020
    The only thing still neutral in Switzerland is the cheese, even that has too many holes.
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  • Dr. Tinner, USA, WA state
    Dr. Tinner, USA, WA state at 28.05.2020
    A few members of my (Swiss) family helped the CIA in an under cover operation against an international and dangerous organization that was acquiring nuclear weapons, this in agreement of the Suisse Govt. However, when they were paid a few millions Dollars by the CIA, the suisse "IRS" threw them in jail for tax issues. They came out of jail shortly after been imprisoned by another secret arrangement between USA and CH. Politics and money talk... the rest, well it walks! Nothing surprises me any more.
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  • Adnane Ben Chaabane, Tunisie
    Adnane Ben Chaabane, Tunisie at 28.05.2020
    Ce qui me gène le plus dans cette affaire notre hypocrisie.
    On refuse aux Suisses résidents à l'étranger d'avoir un compte en Suisse (même Poste Finances) sous prétexte qu'ils craignent le blanchiment d'argents et de l'autre côté l'état fédéral se tait sur des dépassements aussi greaves.
    Que les faits se seraient passées ailleurs, ça aurait été pour moi une simple affaire d'espionage. Qu'ils se soient passées en Suisse (dénociatrice et donneuse de leçon à tout niveau) et sous couvert de l'état fédéral ne fait qu'aggraver le sentiment d'hypocrisie resenti.
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  • Mirjam Zwald, Deutschland
    Mirjam Zwald, Deutschland at 04.06.2020
    I agree with Dr. Tinner, I think so too, it is once again all about money and pressure. Who knows, what these 2 countries said/did to make this company and the Swiss government do what they "had to do"?! It is sad.
    And as mister Frieden wrote, there are many holes! Maybe good we do not know from all, we would be shocked. I know since some years that Switzerland wasn't "so clean" also during second war. First it shocked me, but you know, I personally think and know "the bad" is inside of everyone, no matter from which country you come... So I live in Germany but I decided not to point on them or judge them, because somehow we are all bad. That is why I personally think, I need God, because he is the only one who can make me a better person...
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  • Walter Peter, Deutschland
    Walter Peter, Deutschland at 08.06.2020
    Ist es Neutralität, wenn brutalste Diktatoren ihr blutverschmiertes Geld in der Schweiz anlegen?
    Ist es Neutralität, wenn nach wie vor Waffen in Krisengebiete verkauft werden?
    Ist es Neutralität, wenn sich die Schweiz «genfrei» in der Landwirtschaft nennt und die Basler Multis den Rest der Welt «verseuchen»?
    Ist es Neutralität wenn schwarze Schafe auf Plakaten erscheinen?

    Der goldene Käfig lässt viele Verblendungen zu.
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