Swiss firm disputes allegations of rigging Maker of code machines labels link with NSA 'hearsay' and 'invention'; NO SUCH AGENCY


A SWISS MAKER of coding equipment yesterday dismissed as "old hearsay" and "pure invention" a Sun article presenting evidence that the National Security Agency rigged its machines so U.S. spies could easily read foreign governments' secret messages.

"The allegations are not new at all and just repeat tales which date back 25 or more years," Crypto AG said in a two-page statement. "A connection between the activities of Crypto AG and NSA is pure invention, obviously construed to discredit Crypto AG."

In an article published Sunday based on interviews with former employees of Crypto and company documents, The Sun reported that for decades NSA apparently rigged Crypto's machines so U.S. eavesdroppers could effortlessly decipher the most sensitive political and military messages of many countries. Crypto AG, or Crypto Inc., has sold its security products to some 120 countries, including prime U.S. intelligence targets such as Iran, Iraq, Libya and Yugoslavia.

The statement issued from the company's headquarters in Zug said Crypto has "no political ambitions or claims." It blamed the charges that Crypto cooperated with NSA on "disgruntled" employees and said some of those quoted were not qualified to judge whether the machines were rigged.

The statement even suggested that the story was a "well conceived ploy" by Western governments to damage Crypto and curb the spread of high-grade encryption machinery to independent countries.

Yesterday's statement from Crypto did not address why an NSA cryptographer named Nora L. Mackebee attended a 1975 meeting with Crypto personnel to discuss the design of a new machine. A confidential corporate memorandum of that meeting, obtained by The Sun, lists "Nora Mackabee" as a participant in the discussion of design details for a new Crypto machine.

Asked last month about her work with Crypto, Ms. Mackebee, 55, now retired, was silent for a time and then said, "I can't say anything about that."

Bob Newman, a Motorola engineer who worked on some Crypto machines in the 1970s, told The Sun he recalled Ms. Mackebee and several other Americans as "consultants" who were well-known to executives of the Swiss firm. He said he had no idea they might be intelligence agents.

Asked last month to explain the memo naming Ms. Mackebee, Crypto Senior Vice President Josef Schnetzer said he could find no one at the company who remembered her.

The connection between Crypto and NSA apparently began in 1957, when William F. Friedman, a retired cryptographer and special assistant to the director of NSA, visited Crypto founder Boris C. W. Hagelin on a top-secret official mission. Mr. Hagelin had made millions selling code machines to the U.S. Army during World War II.

James Bamford wrote in his 1982 book on NSA, "The Puzzle Palace," that Mr. Friedman's letters contain references to a mysterious "Boris project" apparently involving cooperation between NSA and Crypto.

Rigging allegations surfaced in the Swiss press last year in connection with the case of Hans Buehler, a Crypto salesman imprisoned in Iran for nine months and released in 1993 after the company paid $1 million. Crypto later fired Mr. Buehler. In the ensuing controversy, former Crypto employees charged that the machines were rigged.

Several former Crypto engineers told The Sun they were required by bosses to alter the coding machines according to technical documents provided by mysterious visitors to the Zug plant. Those visitors included Ms. Mackebee, they said.

One engineer said that when he confronted Boris Hagelin, Mr. Hagelin confirmed the deception and said the Third World countries who bought Crypto's equipment should not have absolutely secure communications.

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