Switzerland’s relaxed export policy is the basis for its decades of leadership in encryption technology. It was no coincidence that the Swedish cipher machine inventor Boris Hagelin (1892–1983) chose Zug in 1953 to found his Crypto AG. This has become world-famous, at least since the crypto leaks uncovered this week that the US secret service CIA and the German intelligence service BND have been selling manipulated encryption devices all over the world for decades, eavesdropping on 100 countries.
It would not have been possible in Hagelin’s homeland. The Swedes saw his encryption machines as war material that is unsuitable for export business. Hagelin worked closely with the Americans during the war. He had a gentlemen’s agreement with them, according to which he only sold the most sophisticated encryption devices to NATO-friendly countries. This is in the files of the former chief cryptologist of the US intelligence service, NSA, William Friedman (1891-1969), which can be viewed by everyone.
Swiss government turned a blind eye
Also readable: Friedman, who developed the encryption machines with hailstones, was very important to Switzerland’s export regime. When asked whether the Hagelin company had to apply for export licenses from the Swiss government, he said the following: «Yes, but usually this is not enforced. Most of the time they turn a blind eye … »
Crypto AG came into the possession of the CIA and the German BND in the early 1970s and flourished. It exported thousands of encryption devices to over 100 countries. The biggest competitor was Omnisec from Dällikon ZH, which also specializes in encryption technology. The State Secretariat for Economic Affairs has issued export licenses for encryption technology worth several hundred million francs in recent decades. Sales to Saudi Arabia, Venezuela, Chile, China, India, etc. have been approved.
Only the Russians could never cheer the devices. They had their own legendary machines. James Bond also chewed his teeth on a Russian cipher machine called Lektor in “Greetings from Moscow”.
Connection to the Swiss army
Omnisec was also an important supplier to the Swiss army. There have also been reports of connections to the US secret service about the crypto competitor for some time. From the turn of the millennium until the end, Omnisec was owned by Hans-Jörg Bärtschi. The current President of the Federal Arms Commission does not want to comment on Omnisec at BLICK’s request.
Just five years ago, Omnisec and Crypto AG made headlines with their encrypted, tap-proof smartphones and network solutions, which Barack Obama (58) and the Federal Council also used. Highly secure cryptography cell phones were the latest craze. Bärtschi liquidated Omnisec two years ago on the grounds that the market would be dead in three to five years.
The IT company Infoguard from Baar ZG also lives from the business with protected communication solutions. The former head of Crypto referred to Infoguard as a sister company in 2018. The two companies also shared boards of directors, as the “Aargauer Zeitung” reports this week. The company denies a connection to secret services. Infoguard as well as the successor companies of Crypto AG have realigned.
Digitization has made the concept of encryption devices obsolete, because encryption is now done via software and no longer through devices.
When encrypting messages, it is crucial that nobody – except the sender and recipient – can read the information. An unauthorized reader should only see an unrelated row of letters. With the help of a «key» it can be translated into the original message. You use two principles.
Transposition changes the position of a letter within a word or text. From the word BLICK we get the cryptic string «KCIBL». The letters are shifted according to a strict code. Once you have it, it is easy to read the word.
With substitution, characters are replaced with another character according to specified rules. For example, all letters can be shifted ten positions in the alphabet. A «B» becomes an «L», a «K» becomes a «U», and a VIEW becomes LVSMU.
In reality, encryption algorithms are used, which are much more sophisticated. It cannot be cracked either by puzzling or trying it out. Unless the key is manipulated. Just as Crypto AG is said to have done on behalf of foreign secret services.