http://www.cbc.ca/canada/edmonton/story/2007/05/07/tech-poppy-quarter.html 

The Associated Press 
May 7, 2007

The surprise explanation behind the U.S. government's sensational but 
false warnings about mysterious Canadian spy coins is the harmless poppy 
quarter, the world's first colourized coin.

The odd-looking coins were so unfamiliar to suspicious U.S. army 
contractors travelling in Canada that they filed confidential espionage 
accounts about them.

The worried contractors described the coins as "anomalous" and "filled 
with something manmade that looked like nanotechnology," said 
once-classified U.S. government reports and e-mails.

The 25-cent piece features the red image of a poppy inlaid over a maple 
leaf. The quarter is identical to the coins pictured and described as 
suspicious in the contractors' accounts.

The supposed nanotechnology actually was a conventional protective 
coating the Royal Canadian Mint applied to prevent the poppy's red 
colour from rubbing off. The mint produced nearly 30 million such 
quarters in 2004 commemorating Canada's 117,000 war dead.

"It did not appear to be electronic [analog] in nature or have a power 
source," wrote one U.S. contractor, who discovered the coin in the cup 
holder of a rental car.

"Under high-power microscope, it appeared to be complex consisting of 
several layers of clear but different material, with a wire-like mesh 
suspended on top."

The confidential accounts led to a sensational warning from the U.S. 
Defence Security Service, an agency of the Defence Department, that 
mysterious coins with radio frequency transmitters were found planted on 
U.S. contractors with classified security clearances on at least three 
separate occasions between October 2005 and January 2006 as the 
contractors travelled through Canada.

One contractor believed someone had placed two of the quarters in an 
outer coat pocket after the contractor had emptied the pocket hours 
earlier.

"Coat pockets were empty that morning and I was keeping all of my coins 
in a plastic bag in my inner coat pocket," the contractor wrote.

Meanwhile, in Canada, senior intelligence officials expressed annoyance 
with the U.S. spy-coin warnings as they tried to learn more about the 
oddball claims.

"That story about Canadians planting coins in the pockets of defence 
contractors will not go away," Luc Portelance, now deputy director for 
the Canadian Security Intelligence Service, wrote in a January e-mail to 
a subordinate.


'What's the story on this?'

"Could someone tell me more? Where do we stand and what's the story on 
this?"

Others in Canada's spy service also were searching for answers. "We 
would be very interested in any more detail you may have on the validity 
of the comment related to the use of Canadian coins in this manner," 
another intelligence official wrote in an e-mail.

"If it is accurate, are they talking industrial or state espionage? If 
the latter, who?" The identity of the e-mail's recipient was censored.

Intelligence and technology experts were flabbergasted by the warning 
when it was first publicized earlier this year. The warning suggested 
such transmitters could be used surreptitiously to track the movements 
of people carrying the coins.

"I thought the whole thing was preposterous, to think you could tag an 
individual with a coin and think they wouldn't give it away or spend 
it," said H. Keith Melton, a leading intelligence historian.

The Defence Security Service disavowed its warning about spy coins after 
an international furore but until now it has never disclosed the details 
behind the embarrassing episode. The United States said it never 
substantiated the contractors' claims and performed an internal review 
to determine how the false information was included in a 29-page 
published report about espionage concerns.


Coins not examined

The Defence Security Service never examined the suspicious coins, 
spokeswoman Cindy McGovern said.

"We know where we made the mistake," she said.

"The information wasn't properly vetted. While these coins aroused 
suspicion, there ultimately was nothing there."

Numismatist Dennis Pike, of Canadian Coin & Currency near Toronto, 
quickly matched a grainy image and physical descriptions of the suspect 
coins in the contractors' confidential accounts to the 25-cent poppy 
piece.

"It's not uncommon at all," Pike said.

He added the coin's protective coating glows peculiarly under 
ultraviolet light.

"That may have been a little bit suspicious," he said.

(c) The Canadian Press, 2007


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