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An Australian intelligence chief has confirmed his country's involvement in a global electronic spying network which also involves New Zealand.

The New Zealand Government has previously acknowledged that some overseas telephone calls made by New Zealanders will be monitored by intelligence staff.

But claims are now being made that New Zealand is part of a spy network which passes confidential information on citizens to overseas agencies.

Until now, the ground-based satellite system Echelon has been shrouded in secrecy.

The British Foreign Office refuses to confirm or deny its existence, and British Prime Ministers have dismissed claims that Britain, the US and Canada routinely exchange signals intelligence.

But an Australian television report yesterday, which had been highlighted by the British media, said that the global network allowed Britain and the US to eavesdrop on telephone, fax and e-mail communications.

Martin Brady, the director of Australia's Defence Signals Directorate (DSD), revealed in Nine Network's Sunday programme that Australia routinely intercepts fax, phone and Internet communications via satellites over the Indian and Pacific Oceans.

The intercepts are sifted by computers to search for key words and forwarded to the British and the Americans under the "UKUSA alliance" arrangement.

Mr Brady confirmed that the DSD "does cooperate with counterpart signals intelligence organisations overseas under the UKUSA relationship."

He said that the DSD and its counterpart signal intelligence organisations "operate internal procedures to satisfy themselves their national interests and policies are respected by others."

But Mr Brady's claims are challenged by former signal intelligence officers in New Zealand and Canada. They are reported as saying that members of the alliance exchange confidential information on each other's citizens.

The claims come as no surprise to peace researcher Nicky Hager, who said last night that the Waihopai satellite station near Blenheim picked up information on New Zealand citizens which was passed to overseas intelligence agencies.

"What it means is that in the intelligence reporting on the South Pacific by New Zealand, they stick to those rules that the DSD boss mentioned. But when it is foreigners using our facilities automatically for their own intelligence gathering, there is no New Zealand control over whether New Zealanders get intercepted."
- OBSERVER, STAFF REPORTER