Did Agent Smith have the power to fulfill Cypher's wish?

Background:

In The Matrix (1999), there is a scene where Cypher and Agent Smith strike a deal.

Smith wants the access codes to the Zion mainframe. Cypher offers Morpheus, who knows these codes.

Cypher values ignorance (which is "bliss"), and wants to retroactively take the blue pill; getting re-connected into the Matrix, sans the memory of the real world. He also wants fame and glory.

Questions:

How would Smith be able to fulfill his end of the bargain? How was he affiliated with the machines at this point? In the third movie, Smith was a self-replicating virus, and even Deus Ex wanted him gone. Was he working with/for the machines before this? I always thought the agents were "self-employed" so to speak.