Major companies are failing to disclose data security breaches, a secure communications company has claimed.

The co-founder of Silent Circle, which closed its secure email service over concerns that it could not guarantee users' privacy from government-mandated surveillance, claimed that corporate users have admitted data breaches that have not been disclosed to shareholders.

“We’re like digital priests,” said Mike Janke, chief executive of the service. “Everybody calls us, or comes to our office, and tells us just every dirty thing that’s going on.

"I sat and spoke with the chief information officer of a Fortune 500 company, and he’s telling me that they’re not reporting 80% of their data breaches. And I’m going, ‘there’s a law against that'.

“Customers of ours disclose that they’re being breached, weekly, and they don’t disclose it to shareholders.”

That revelation comes against the background of a major investigation by security website Krebs on Security which revealed that some of America’s biggest data broker firms may have been unwittingly compromised.

SSNDOB is a site trading stolen personal information and achieved notoriety after leaking the Social Security numbers for celebrities like Jay Z and Michelle Obama.

Krebs found that “the miscreants behind this ID theft service controlled at least five infected systems at different US-based consumer and business data aggregators,” including Dun & Bradstreet, Kroll Background America, and LexisNexis.

“We have identified an intrusion targeting our data, but to date have found no evidence that customer or consumer data were reached or retrieved,” Aurobindo Sundaram, vice president of information assurance and data protection at the parent company of LexisNexis, Reed Elsevier, told Krebs on Security.

“Because this matter is actively being investigated by law enforcement, I can’t provide further information at this time.”

Email is 'fundametally broken'

Janke explained the decision to close down Silent Circle's email service, part of a suite of encrypted communications tools across a number of platforms.

“Email is different. It’s fundamentally broken,” Janke said, comparing the protocol to services built from the ground up for security.

“The architecture was made 40 years ago. Imagine I’m sending you a letter in an envelope: this is encrypted email. They can’t open the letter to read what I wrote you – right, yet. But where it was from, my GPS location, what time, who I bcc’ed, the subject line.

“We were sitting on metadata, so that we knew it was only a matter of time before someone would come to us. Email was different – the rest of our products have no metadata, no IP logging, no way – but email was fundamentally broken.”

Silent Circle’s email application was hugely popular – “We became profitable like that,” Janke said, snapping his fingers – but when a similar service, Lavabit, closed its doors without warning, the company re-examined its business.

Lavabit had garnered unwelcome attention for providing services to Edward Snowden, the whistleblower who disclosed the level of internet surveillance being conducted by the National Security Agency in the US.

Silent Circle then decided to shut down the service to avoid becoming “complicit in crimes against the American people”.

“We have been developing an email app that’s based upon our peer-to-peer encryption,” Janke said, explaining his own decision to follow suit.

“We thought we’d have it done sooner, so this email [app] that we put out, the encrypted email, was a stop-gap. We thought we could put it out, and then replace it with the new. But we became a lot more popular than we thought around the world.

“We don’t know our customers, so the only way to communicate with them is to maybe put a blog post out, saying we’re going to shut email off in 12 hours. That’s like saying ‘all the world’s law enforcement, you got 12 hours to subpoena us.’ No. So, John, myself and [co-foubder] Phil [Zimmerman, inventor of the PGP security system], we made the decision to scorch earth. Gone.”

• Find out the best alternative secure services to use now that Lavabit and Secure Circle have closed down