In a recent post on Privacy Digest, and an article in the NYTimes, there is a discussion of some major and well known vulnerabilities in the global public key infrastructure (PKI) and some examples of exploitations of that vulnerability.
The issue is with the proliferation of certificate authorities on the Internet, and the low level of oversight on their policies.
Using the web as an example, here is how it works. Embedded in every browser is a list of "certificate authorities". These are companies that are deemed trustworthy to issue and sign website certificates. Website certificates are what allows websites to be authenticated by your browser and enables SSL based secure connections (e.g. to your bank).
These certificate authorities may also be able to delegate their certificate signing authorities to other secondary certificate authority organizations. The list of primary certificate authorities in your browser is long (I count 43 in my copy of Firefox), and who knows how many secondary certificate authorities may be out there. These certificate authorities exist all over the world, and any of them can issue a certificate that your browser will accept as valid.
A malevolent certificate authority could issue certificates to allow them to impersonate any secure website.
The articles talk specifically about a secondary certificate authority called Etisalat, located in the UAE. They created a certificate which allowed them to sign code which would be accepted as valid and authorized by BlackBerry cell phones. They then created and distributed software to about 100,000 users which enabled government surveillance of the devices. RIM, the maker of BlackBerry, was able to detect and patch this introduced back door.
Etisalat could create certificates to allow the UAE to intercept and read all secure web traffic traveling over networks within that country.
It is likely that there are many other certificate authorities that are similarly willing to compromise the security of the PKI for various ends. To date, no action has been taken against Etisalat. The EFF is calling for Verizon to revoke Etisalat's ability to issue certificates (Verizon is the primary authority that delegated to Etisalat as the secondary).