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CREDIT SUISSE

Probe unearths second spying case at Credit Suisse

An internal Credit Suisse probe confirmed Monday that a second executive had been spied on, following earlier revelations that the bank's former head of wealth management was tailed by private investigators.

Probe unearths second spying case at Credit Suisse
Photo: Depositphotos

But Switzerland's number two bank maintained that just one senior leader, who has since been forced out, was entirely to blame for both incidents and that rest of the top brass had not been aware of the activities. 

Releasing the investigation conducted by the Homburger law firm, Credit Suisse said that “it has been confirmed that Peter Goerke, who was a Member of the Executive Board at the time, was placed under observation by a third-party firm on behalf of Credit Suisse for a period of several days in February 2019.”

The probe was launched following media reports last week that spying at Credit Suisse ran deeper than one case.

The banking giant was shaken by the discovery last September that surveillance had been ordered on star banker and former wealth management chief Iqbal Khan.

READ: Credit Suisse boss resigns following spying scandal

Kahn was tailed after he jumped ship to competitor UBS, sparking fears he was preparing to poach employees and clients.

That revelation came after Khan confronted the private investigators tailing him, leading to a fight in the heart of Zurich. Khan pressed charges.

An initial investigation by Homburger blamed former chief operating officer Pierre-Olivier Bouee, who stepped down, but found no indication chief executive Tidjane Thiam was involved.

The probe results released Monday echoed those findings, concluding that Bouee “issued the mandate to have Peter Goerke put under observation.”

“As was the case with Iqbal Khan, this observation was carried out via an intermediary,” it said, stressing that Bouee “did not respond truthfully” during the initial investigation “when asked about any additional observations and did not disclose the observation of Peter Goerke.”

The new investigation also did not find indications that Thiam or others in the board or management “had any knowledge of the observation of Peter Goerke until media reported on it,” the statement said.

“The Board of Directors considers the observation of Peter Goerke to be unacceptable and completely inappropriate” it said, adding that it had issued an apology to Goerke.

It added that “safeguards” were already in place to avoid future similar misconduct. Switzerland's market watchdog FINMA meanwhile said last week that it was “appointing an independent auditor to investigate Credit Suisse in the context of observation activities.”

“This investigator will clarify the relevant corporate governance questions, particularly in relation to the observation activities,” a statement said Friday.

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SPYING

Swiss neutrality tarnished by ‘wilful ignorance’ in spy scandal

Outraged commentators warned Wednesday that revelations the CIA and Germany's intelligence service had for decades used a Swiss encryption company for spying had seriously damaged Switzerland's cherished reputation for neutrality.

Swiss neutrality tarnished by 'wilful ignorance' in spy scandal
Photo: FABRICE COFFRINI / AFP

Critics voiced particular concern that Bern may have been at least tacitly complicit in the secret operation.

Switzerland, which takes pride in its neutral and non-aligned status, “was hosting a quasi ally intelligence agency,” the Tribune de Geneve daily said in an editorial. Swiss officials “very likely” knew what was going on but “closed their eyes” in the name of neutrality, it added.

Home to the United Nations European headquarters and the International Committee of the Red Cross, Switzerland is recognised worldwide for its standing as an honest broker.

But media revelations Tuesday told how for decades the US and West German intelligence services raked in the top-secret communications of governments around the world.

READ: Probe unearths second spying case at Credit Suisse 

The Trojan horse they used was their hidden control of Swiss encryption company Crypto AG.

The company supplied devices for encoded communications to some 120 countries from after World War II to the beginning of this century, including Iran, South American governments, and India and Pakistan.

Unknown to those governments, Crypto was secretly acquired in 1970 by the US Central Intelligence Agency together with the then West Germany's BND Federal Intelligence Service.

Vital intelligence over decades

Together they rigged Crypto's equipment to be able to easily break the codes and read the government's messages, according to reports by the Washington Post, German television ZTE and Swiss state media SRF.

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 percent of all the foreign communications US code-breakers processed for intelligence.

The spy agencies were thus able to gather precious information during major crises such as the hostage crisis at the US embassy in Tehran in 1979 the 1982 Falklands War between Argentina and Britain.

They also got information on several political assassinations in Latin America.

The Swiss government said Tuesday it had named a retired federal judge to look into the matter, with his findings due out in June. But Carolina Bohren, a Swiss defence ministry spokeswoman, stressed the difficulties ahead.

“The events in question began in 1945 and are difficult to reconstruct and interpret today,” she said.

Bern also announced it had suspended export licenses for Crypto's successor companies, until the situation has been “clarified”.

But a number of political parties, insisting that far more needed to be done, on Wednesday called for a full-blown investigation.

'Getting out of this mess'

The Swiss Socialist Party wondered in a tweet whether the country's own intelligence service was a “victim or an accomplice”, demanding “clarifications and a full investigation”.

The Greens and Christian Democrats also suggested a parliamentary commission might be called for.

Amnesty International's Swiss chapter meanwhile raised questions about the Swiss authorities' responsibility both for the espionage and for how the information gathered had been used.

“Were our intelligence services and the government aware of the torture and the murders committed by military dictatorships in Chile and Argentina?” it asked in a tweet.

“Did they take any measures? A full investigation must be carried out.”

Switzerland has a centuries-old tradition of neutrality.

It avoided being drawn into either of the World Wars and has stayed outside political and military alliances such as NATO.

Several media reports noted Wednesday that this reputation ended up providing excellent cover for the United States and Germany when they set up their spying operation there.

Whether this was done “out of incompetence, because of a desire to cover for foreign secret service agents, or to profit from the information they uncovered, must now be clarified,” the Tages-Anzeiger daily insisted.

“That is the only way to get out of this mess.”

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