Count your change

The Defense Department is warning its American contractor employees about a new espionage threat seemingly straight from Hollywood: It discovered Canadian coins with tiny radio frequency transmitters hidden inside. In a U.S. government report, it said the mysterious coins 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 traveled through Canada.

Top suspects, according to intelligence and technology experts: China, Russia or even France — all said to actively run espionage operations inside Canada with enough sophistication to produce such technology.

Update: Or maybe not.

A report that some Canadian coins have been compromised by spies secretly embedding transmitters in them is wrong, a U.S. official said yesterday. A report from a Pentagon agency made headlines this week because it stated Canadian coins found in the possession of U.S. defence contractors had been tampered with. While some special-issue Canadian coins briefly triggered suspicions in the United States, the U.S. official, who spoke on condition of anonymity, said the fears were groundless. "We have no evidence to indicate anything connected with these coins poses a risk or danger," the official said.