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SPY agencies in Britain and America eavesdropped on Diana, Princess of Wales and Mark Thatcher, son of the former prime minister, as part of a global system of monitoring communications, according to former intelligence officials.
Calls by Diana were picked up because of her international charity work; Thatcher's calls surfaced in the monitoring of British arms deals with Saudi Arabia.
The officials also revealed that charities such as Amnesty International, Christian Aid and Greenpeace were secretly spied on. Overseas targets have even included the Vatican: messages sent by the Pope and the late Mother Teresa of Calcutta have been intercepted, read and passed on to Whitehall intelligence officers, the sources say.
Codenamed Echelon, the monitoring system is part of a worldwide network of listening stations capable of processing millions of messages an hour. At least 10 Echelon stations operate around the world. Canada, Australia and New Zealand participate, as well as Britain and the United States.
Former intelligence officials have spoken out after a decision by the European parliament to launch an inquiry into Echelon's operations. Officially, the British and American governments continue to deny the network's existence.
Wayne Madsen, who worked for 20 years at America's National Security Agency (NSA) and other agencies, said last week: "Anybody who is politically active will eventually end up on the NSA's radar screen."
Charities operating overseas are monitored because they often have access to details about controversial regimes. Amnesty was a particular target in the late 1980s, sources said. According to Madsen, "undisclosed material held in US government files on Princess Diana was collected because of her work with the international campaign to ban landmines".
The NSA, a former insider has revealed, has also targeted communications concerning British military sales to Saudi Arabia in the 1980s.
Its monitoring intercepted communications sent by Thatcher, who was then involved in the giant al-Yamamah arms contract between Britain and Saudi Arabia. The NSA also eavesdropped on the Panavia consortium, which builds the Tornado fighter aircraft. British Aerospace is one of the main partners in the consortium.
"I just think of Echelon as a great vacuum cleaner in the sky which sucks everything up," said Mike Frost, a former Canadian intelligence officer. "We just get to look at the goodies."
Frost, who retired in 1992 after 20 years' service, has also revealed that Canada's equivalent of GCHQ was used by Margaret Thatcher to monitor two cabinet colleagues. "She wanted to find out not what they were saying," Frost said, "but what they were thinking."
The ultra-secret operation was conducted from an office at Macdonald House in Grosvenor Square, central London, which houses the Canadian high commission. According to Frost, Canadian spies were asked by GCHQ to undertake the operation because it was too politically sensitive for GCHQ to do itself. After spending three weeks tapping the ministers' communications, the Canadian officer who led the operation drove to GCHQ and handed over the tapes.
Margaret Newsham, an American computer software manager who worked during the 1980s at the giant listening station at Menwith Hill in Yorkshire, confirmed last week: "I was aware that massive security violations were taking place. If these systems were for combating drugs or terrorism, that would be fine. But not for use in spying on individuals."
Newsham says she was invited to listen in on an American senator's intercepted phone call at Menwith Hill. Later she informed Congress about her experiences. "It was evident American constitutional laws had been broken," she said.
Avenues of redress for those targeted by Echelon are few. The Sunday Times has established that a loophole in the 1985 Interception of Communication Act means intelligence officials can put individuals and organisations under surveillance without a specific ministerial warrant. Section 3 (2) of the act, governing interception of communications going to, through or from Britain, allows entire classes of communication to be monitored.