Encrypted codes enable a pay-TV firm to charge for its programmes, without them its revenue would soon evaporate
An ONdigital smart card. Photograph: Graham Turner for the Guardian
New allegations about ONdigital's collapse centre on a small, high-tech item: the TV smart card.
The smart card's encrypted codes enable a pay-TV firm to charge for its programmes, and switch off the viewers who don't pay. Without them, its revenue would soon evaporate.
A young German hacker, Oliver Koemmerling, now living in the tax haven of Monaco, gained a reputation in the 1990s as a man who could unlock the secrets of pay-TV smart cards.
He has now surfaced to say that he was recruited as a result by Ray Adams, the former Scotland Yard commander who was handling UK security for Murdoch's own smart card company, NDS.
NDS, according to him, was not just interested in protecting its own cards, as used for Sky, but also in cracking the secrets of the cards used by rivals.
Koemmerling has told BBC1's Panorama: "Adams made me a proposition … He looked at me and said 'Could you imagine working for us?' This was really after half an hour. And I said to him 'In principle yes, but what do you really want? What does that mean? What do I have to do?'"
According to the young hacker, he ended up heading a team at the NDS lab in Haifa, Israel, successfully breaking in to the codes among others of Canal Plus, the French smart card system used in Britain by ONdigital. "There was some request from the marketing department."
This sort of "reverse engineering" of rival products is perfectly legal, as NDS point out. But what happened next was to lead to a scandal.
The codes appear to have been turned over to Adams. Adams has denied this over the years. But an email quoted by Panorama appears to contradict him. On 13 July 2000, an NDS technician messaged Adams about the "On Digital Stuff" saying "I'm sure you must have the July keys … but just in case you don't …" He includes the codes.
NDS now maintain it was in fact part of Adams' job "to have knowledge of pirate technology and of codes that could be used by hackers".
NDS also accept that Adams was at the time funding one of the world's biggest pirate TV websites, supplying it with servers and discreetly paying its operator, Lee Gibling up to £60,000 a year.
NDS say this was a legitimate scheme to infiltrate the other pirates. Panorama quotes an email NDS security in Israel sent Adams, suggesting there were nevertheless legal concerns. Avigail Gutman wrote on 21 December 1999: "If he Lee ever gets exposed (god forbid, knock on wood,) – does it put NDS in any legal bind?"
Gibling, after years of lying low abroad and receiving remittances from NDS, has now gone public for the first time. He says NDS went much further than they have admitted: "There was a meeting that took place in a hotel and Mr Adams, myself and other NDS representatives were there and it became very clear that there was a hack being worked on which I was quite surprised at, at the time … This came from a conversation from Mr Adams."
He goes on: "They delivered the actual software to be able to do this, with prior instructions that it should go to the widest possible community … Software to be able to activate ONdigital cards, so giving a full channel line-up without payment".
The cracked ONdigital codes leaked out on to the internet, on another Canadian pirate site.
Asked if those pirated codes originated from his own team, Koemmerling says he has no doubt about it. "The timestamp was like a fingerprint … by statistics you can say it is astronomically small that it is not coming from us."
Gibling kept Adams up on the spread of the hack on the internet, according to the fresh evidence, emailing him on 26 July 2000: "This is better a UK link for the On-Digi software."
As an under-the-counter trade boomed in its pirated cards, ONdigital tried switching codes. But Gibling says he was promptly supplied with the new versions for his THOIC pirate site: "We sent them out update codes. We wanted people to be able to update these cards themselves, we didn't want them buying a single card and then finding they couldn't get channels. We wanted them to stay and keep with ONdigital, flogging it until it broke."
Eventually, the fact of Gibling's secret subsidy from NDS leaked out to his fellow pirates and the operation based at his Cornish home was hastily shut down by NDS staff. "THOIC was dismembered … We sledgehammered all the hard drives and everything else on computers."
He spent the next 10 years on the run abroad. "It was the easy option out for both parties, for myself and NDS at the time – when if (to be frank-like) – the shit hit the fan".
For several years, he says, NDS kept sending him money: "The cheques were paid direct into my bank account … up until end of 2008."
He was then given a £15,000 severance cheque, on a promise of his confidentiality.
Meanwhile, ONdigital had collapsed. Simon Dore, the former chief technical officer, told the programme: "The business had its issues aside from the piracy, no question, but issues I believe would have been solvable by careful and good management. The real killer, the hole beneath the water line, was the piracy. We couldn't recover from that."
NDS says it never did anything illegal, although it did control THOIC behind the scenes. "It is simply not true that NDS used the THOIC website to sabotage the commercial interests of ONdigital/ITV digital or indeed any rival."
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