It has been pretty chaotic in German Chancellor Angela Merkel's cabinet ever since the Chaos Computer Club dumped some alarming technology news in her lap. Turns out that the German government's "lawful interception" application, supposedly designed only to monitor IP telephone calls, is just a little more powerful than the police let on.

Berlin-based CCC released its analysis of Germany's "Quellen-TKÜ" ("source wiretapping") trojan on Saturday. The results weren't pretty. Despite a constitutional court ban on the use of malware to crack PCs, the state-sanctioned malware's makers didn't even bother to add technical barriers ensuring that the code would only be used for tapping Internet telephone conversations.

"On the contrary, the design included functionality to clandestinely add more components over the network right from the start, making it a bridge-head to further infiltrate the computer," CCC's report noted.

But that's only the start of what this application can do:

The government malware can, unchecked by a judge, load extensions by remote control, to use the trojan for other functions, including but not limited to eavesdropping. This complete control over the infected PC—owing to the poor craftsmanship that went into this trojan—is open not just to the agency that put it there, but to everyone. It could even be used to upload falsified "evidence" against the PC's owner, or to delete files, which puts the whole rationale for this method of investigation into question.

Gray areas

Keep in mind that this revelation comes as Merkel is trying to rescue about a quarter of Europe via a Eurozone bailout fund. She was touring Vietnam on Wednesday, dismissing Slovakia's rejection of the plan, a day after her Minister of Justice Sabine Leutheusser-Schnarrenberger called for a national- and state-level inquiry over the use of the trojan.

Who will be investigated? The German state of Bavaria says it has used Quellen-TKÜ, but legally, its officials insist. Wired reports that Bavaria approached the Federal Bureau of Investigation in 2007 to learn more about US malware techniques. Three other German states admit they've accessed the trojan—only to go after very bad criminals, of course.

Alas, Germany's crazy-quilt coalition politics have closed in on the scandal a lot faster than the Minister's promised probe. Merkel's government consists of members of the Christian Democratic Union and the Free Democratic Party, and they've been quarrelling over how to handle this mess. Leutheusser-Schnarrenberger of the FDP says she wants action as fast as possible, but leaders of Bavaria's Christian Social Union, allied with the CDU, are now accusing the minister of "putting the police in a legal gray area," as one newspaper describes the charge.

Bavaria's Interior Minister Joachim Herrmann bluntly says he has no problem with the application. "These are measures that are clearly defined by the federal government, and which the constitutional court has allowed for use in investigating serious crime," he told a local newspaper.

Not surprisingly then, Der Spiegel reports that while Interior Minister Hans-Peter Friedrich of the CSU has encouraged all states to put a freeze on the malware program, he has also warned cabinet ministers not to burden investigators with too much "general suspicion."

None of this is sitting very well with the FDP, whose leaders have gone so far as to hold a meeting with the CCC and call on Friedrich to move on the issue as quickly as possible. "We have to show German citizens that this coalition takes the protection of their private sphere seriously," Leutheusser-Schnarrenberger warned.

Hand-crafted?

Agreed, say leaders of Germany's smaller but feisty Pirate Party, whose servers were seized by the government four months ago. "There is no possible way to install a Trojan horse in a way that adheres to legal requirements," the party's Sebastian Nerz told a news agency. The CCC revelations show that German officials possess "either a certain naivety or the intent to breach the constitution."

It's unlikely that any of this infighting is encouraging for the CCC, which has been tracking Quellen-TKÜ for at least three years. The group says that in 2008 German officials assured it that all versions of the trojan would be be "hand-crafted for the specifics of each case." Guess that didn't happen, since CCC investigators now disclose that variations of the malware that they've collected have the same cryptographic key and "do not look hand-crafted at all."

Needless to say, CCC's statement demands that all these shenanigans "must stop."

At the same time, "we would like to call on all hackers and people interested in technology to further analyze the malware, so that at least some benefit can be reaped from this embarrassing eavesdropping attempt," the commentary concludes. "Also, we will gladly continue to receive copies of other versions of government malware off your hands."