The Chronicle Herald, 14 Jan 2007
You CAN talk in front of your coins
Spy coin caper loses currency with retraction from U.S. defence agency
By JIM BRONSKILL The Canadian Press
OTTAWA — It seems there’s no danger of your spare change spying on you after all.
A U.S. government defence agency has suddenly retracted its claim that Canadian coins containing tiny transmitters were planted on at least three American contractors who visited Canada.
It’s the latest twist in an intriguing cash caper.
Canadians began carefully scrutinizing their loonies following the Virginia-based Defense Security Service’s claim that specially doctored coins were a new tool of the trade for shadowy figures out to steal sensitive U.S. military technology.
"On at least three separate occasions between October 2005 and January 2006, cleared defense contractors’ employees traveling through Canada have discovered radio frequency transmitters embedded in Canadian coins placed on their persons," said the service’s annual counterintelligence report for 2006.
The document did not indicate what sort of coins were involved, and a service spokeswoman said details of the incidents were classified.
Intelligence experts surmised the miniature transmitters in the supposedly rigged coins might be used to track the movements of defence industry personnel.
Knowing their whereabouts could help determine who they were meeting and possibly reveal dealings with suspect countries.
In a statement posted late Friday on its website, the Defense Security Service said the coin claims were based on a report provided to the agency.
"The allegations, however, were found later to be unsubstantiated following an investigation into the matter," the statement said, adding that "the 2006 annual report should not have contained this information."
The service’s acting director has ordered an internal review of the circumstances leading up to publication of the information "to prevent incidents like this" from recurring.
A spokeswoman for the agency was unavailable Saturday.
As recently as Wednesday, the Defense Security Service insisted the risk was genuine.
"What’s in the report is true," agency spokeswoman Martha Deutscher told The Associated Press. "This is indeed a sanitized version, which leaves a lot of questions."
The currency saga, which had already been reported by the Washington Times and The Canadian Press, soon appeared everywhere from CNN and CBS to the Times of London and the China Post.
Hollowed-out coins have long been used in the intelligence world to conceal messages and microfilm.
But the prospect of embedding a transmitter in a coin struck some as technologically far-fetched and rather dubious in that the holder might promptly spend the device, ending the surveillance operation.
Other cases outlined in the report included that of a female foreign national who seduced an American translator in order to obtain the password to his computer network.
"Upon discovery of this security breach, a computer audit revealed foreign intelligence service viruses throughout the system," the report said.
In another instance, a defence contractor’s employee was caught taping classified briefings using a voice-recording pen.
