Re: [TSCM-L] Re: Espionage - People's Republic of China

From: Andre Holmes <1a..._at_GTE.NET>
Date: Tue, 11 Apr 2006 17:05:30 -0400

>
> This article may be rather timely as I was about to pose a question to the
> group.
>
> A TSCM client we service in North America has asked our opinion as to the
> threat to western businesses setting up in China. I would be interested to
> know of any incidents of industrial espionage or any other matter relating
> to western companies setting up in China. The UK and other western
> government official advice is very much positive, with much mention of
> trade
> concessions and grants to attract business development.
>
> I would like to hear about good or bad stories relating mainly to business
> security or TSCM. Our company will definitely not be traveling to china to
> service any TSCM requirements that a new satellite office requires. I
> would
> like to have facts,statistics and genuine examples, not rumour or personal
> opinion. Please feel free to reply off list if required.
>
> I thank you in advance for your help.
>
> Regards
>
> Jason
>
> -----Original Message-----
> From: TSCM-..._at_googlegroups.com [mailto:TSCM-..._at_googlegroups.com] On
> Behalf Of reginal..._at_hotmail.com
> Sent: 10 April 2006 18:43
> To: TSCM-L Professionals List
> Subject: [TSCM-L] Espionage - People's Republic of China
>
>
> While going through some magazines, I came across the following article
> re China's ongoing campaign to climb the technology food chain. I am
> not familiar with this magazine so take the article for what it's
> worth.
>
> "Counter TERRORISM, Spring 2006, Vol. 12, No. 1.
>
> Page 14
>
> "RED FLOWER, RED SPIES: The Threat of Chinese Espionage
>
> By Paul Davis
>
> On November 15, 2005, Debra Wong Yang, the U.S. Attorney for the
> Central District of California, announced that Tai Mak, 56, along with
> his brother Chi Mak, 65, and his brother's wife, Rebecca Laiwah Chiu,
> 62, all Chinese natives, were being indicted on charges of being agents
> of the Peoples' Republic of China (PRC).
>
> The three were held without bond. According to an affidavit by FBI
> special agent James E. Gaylord, they passed information pertaining to
> U.S. Navy research projects to the PRC.
>
> The FBI discovered in their luggage an encrypted disk that contained
> U.S. Navy research information. The FBI said that the information had
> been given to Tai Mak by his brother, Chi Mak. Chi Mak was a senior
> engineer for Power Paragon, a subsidiary of L-3/SPD Technologies/ Power
> Systems Group. The defense contractor has more than 200 contracts with
> the Navy.
>
> As a principal support engineer for Power Paragon, Chi Mak had access
> to classified Navy technology. He was the lead project engineer on a
> research project involving Quiet Electric Drive (QED) propulsion for
> use on U.S. Navy warships. According to the Office of Naval Research,
> the QED is an extremely sensitive project. The QED technology is
> considered to be 'Significant Military Equipment,' and banned from
> being exported to specific countries, including the PRC.
>
> The disk in Tai Mak's luggage had encrypted files beneath the music
> files. According to the FBI, the encrypted files and the music files
> had to be loaded at the same time, indicating spy 'tradecraft' that
> attempted to hide the encrypted files by making the disk appear to
> contain only music.
>
> In a search of Chi Mak's home, the FBI discovered hundreds of
> restricted defense program documents. Many of the documents pertained
> to the technologies found on 'tasking lists' found during a search of
> Mak's trash.
>
> On October 30th, Mak admitted to special agents from the Naval Criminal
> Investigative Service (NCIS) that he provided information related to
> U.S. Navy research projects since 1983. In each instance, he delivered
> the documents to Tai Mak. Initially, he travelled to Hong Kong to
> deliver the documents to his brother, but when his brother moved to the
> U.S., he handed them to him and Tai Mak delivered them to the PRC
> government.
>
> Chi Mak admitted passing information to the PRC relating to Dc/Dc
> converters for U.S. Navy submarines, electro-magnetic aircraft launch
> system for aircraft carriers, the Spy I Radar system power distribution
> for the U.S. Navy's Aegis system, the survivability of battleships
> paper, which concerned the ability of a warship to continue operating
> after being attacked, and other defense programs.
>
> Mak admitted that much of the information he gave his brother was
> marked NO-FORN, a designation that prohibits access to foreigh
> nationals, and many documents were also export-controlled and
> protected by the International Trade in Arms Regulations, which also
> restricts access to foreign nationals.
>
> Mak further admitted that the information given to his brother was
> passed on to a 'Mr. Pu,' who worked for either the People's Liberation
> Army (PLA) or the PRC's intelligence services. Mak said that he gave
> the information because it would help the Chinese government develop
> similar technology.
>
> Chi Mak admitted that his brother Tai Mak joined the PLA and had
> organized propaganda gatherings and was involved in military television
> projects. In a recorded telephone conversation, Tai Mak identified
> himself to Pu as being with the 'Red Flower of North America,' which
> the FBI explained was a way that the PRC intelligence services used
> codewords to identify intelligence bureaus, such as 'Winter
> Chrysanthemum' and 'Autumn Orchard.'
>
> In his court declaration, FBI agent Gaylord stated that based on his
> experience and training, he was familiar with the plans of the PRC to
> build a 'blue water' navy to project its force beyond its coastal
> waters.
>
> 'I know from my experience that the PRC is vitally interested in
> acquiring technology regarding U.S. Navy research projects as part of
> its efforts to build a deep water navy,' Gaylord said.
>
> It appeared that the information provided by the Mak brothers aided the
> PRC in that quest. The Mak case is perhaps illustrative of a growing
> threat today - Chinese espionage.
>
> 'China is the biggest espionage threat to the U.S. today,' David Szady,
> the FBI's assistant director of counterintelligence, told The Wall
> Street Journal in August.
>
> The FBI has assigned hundreds of new counterintelligence agents to the
> field offices, with many of them specializing in Chinese espionage.
> With thousands of Chinese nationals visiting the U.S. as students,
> business people and tourists, the FBI has its work cut out for it.
>
> 'They can work on so many levels that China may prove more difficult to
> contain than the Russian threat,' Szady said.
>
> Chinese intelligence includes a number of government agencies,
> including the Ministry of State Security (MSS), which is responsible
> for civilian collection of foreign intelligence operations in China and
> abroad, and the Military Intelligence Department of the People's
> Liberation Army/General Staff Department/ Second Department, which
> collects military and technological information and foreign
> intelligence. Both agencies recruit Chinese citizens living or
> travelling in countries overseas.
>
> The Mak case is the latest in a string of Chinese espionage cases, many
> of which proved difficult or impossible to prosecute. The Mak case has
> also fueled speculation that it may turn out to be more damaging than
> the John Walker spy ring during the U.S.-Soviet Cold War.
>
> Walker, a Navy radioman, had access to cryptology secrets and along
> with other family members, sold them to the Soviet Union. The
> compormise allowed the Soviets to read U.S. Navy messages. Had the U.S.
> and the Soviet Union gone to war, the Soviet's access would have been
> catastrophic.
>
> A senior counterintelligence official said that while the Mak case was
> certainly damaging, he dashed the idea that the impact would be as
> great as John Walker's 'family of spies.'
>
> 'The Mak case is not remotely as serious as Walker,' the official said.
> 'Walker had given away crypto and had his brother, friend and son all
> spying for him. This is one guy, one contractor.'
>
> However, the official warned against the threat of Chinese espionage,
> noting that unlike the Soviets, the Chinese don't rely on case officers
> handling traditional penetration agents or walk-in spies. He explained
> that the PRC uses the appeal of 'the fatherland' and other persuasive
> methods to entice scores of Chinese and Chinese-Americans to spy.
> Engineers, business people, students, tourists and non-tradional spies
> living or visiting the U.S. are gathering information for them.
>
> 'A bit here, a bit there,' the official said. 'They are willing to
> nibble at the edges.'
>
> Speaking before the House Judiary Subcommittee on Immigration, Border
> Security & Claims back on September 15, 2005, Michelle Van Cleave, the
> National Counterintelligence Executive, said that nearly 140 nations
> and some 35 suspected terrorist organizations currently target the
> United States for intelligence collection through human espionage and
> by other means.
>
> Speaking specifically about China, Van Cleave said the Chinese
> intelligence services employ a full range of collection methodologies,
> from the targeting of well-placed foreign government officials, senior
> scientists and businessmen to the exploitation of academic activities,
> student populations and private businesses.
>
> 'The Chinese intelligence efforts take advantage of our open economic
> system to advance China's technical modernization, reduce U.S. military
> advantage and undermine our economic competitiveness,' Van Cleave told
> the subcommittee.
>
> 'Virtually all kinds of U.S. trade secrets - military and civilian -
> are targeted,' she said. 'The counterintelligence (CI) community pays
> closest attention to technologies with direct military application and
> those on the Defense Department's Military Critical Technologies [List]
> (MCTL), many of which are dual-use, with both military and commercial
> applications.'
>
> Information systems, aeronautics, electronics, armaments and energetic
> materials are all targeted by the Chinese as well as other nations and
> terrorist groups, she said.
>
> Van Cleave was appointed by President Bush to the position of National
> Counterintelligence Executive on July 28, 2003. As head of U.S.
> counterintelligence (CI) she is charged with providing strategic
> guidance to and ensuring the integration of counterintelligence
> activities across the government, under the direction and control of
> the Director of National Intelligence. Van Cleave heads the Ofice of
> the National Counterintelligence Executive (NCIX). [NCIX] produces
> strategic analyses of foreign intelligence threats, conducts damage
> assessments of national security compromises and guides and evaluates
> executive branch CI budgets and programs, prioritizes CI collections,
> operations and investigations to support strategic objectives.
>
> Van Cleave went on to offer the subcommittee some of the relatively new
> methods that China and other state and non-state intelligence
> collectors use to gain access to U.S. technology.
>
> 'The simply ask,' she said.
>
> They ask via e-mail, phone calls, FAX, letter or in person for
> information or technology. When the technology is refused, they look
> until they find a U.S. company that either does not understand the
> export licensing requirements or is willing to ignore them in order to
> make the sale.
>
> Another common technique is to expoit visits to U.S. businesses,
> military bases, national laboratories and private defense suppliers.
> Recognizing the mutual benefits of an unhindered exchange of
> information, the U.S. opens its military bases, national laboratories
> and private defense suppliers to foreign visitors, Van Cleave
> explained.
>
> Van Cleave warned of the insider threat, where an individual with
> access to a U.S. firm's computer system is working for China or other
> foreign entity. The CI community is also concerned about other cyber
> exploitation techniques, which she listed as probing, scanning,
> phishing, spamming, virus dissemination and the use of sophisticated
> hacking tools.
>
> The Counterintelligence Enhancement Act of 2002 (50 USC 401) directs
> that the Office of Counterintelligence Executive produce an annual
> strategy for the counterintelligence programs and activities of the
> U.S. The first national counterintelligence strategy was signed into
> law on March 1, 2005.
>
> The strategy has four esstential objectives: Identify, assess,
> neutralize and exploit the intelligence activities of foreign powers,
> terrorist groups, international criminal organizations and other
> entities who seek to do us harm.
>
> Protect our intelligence collection and analytic capabilities from
> adversary denial, penetration, influence or manipulation.
>
> Help enable the successful execution of our sensitive national security
> operations.
>
> Help safeguard our vital national security secrets, critical assets and
> technologies against theft, covert foreign diversion or exploitation.
>
> The strategy includes improvements to each of our counterintelligence
> capabilities to meet the full range of foreign traditional intelligence
> and emerging threats -human, technical and cyber - in the 21st
> Century."
>
> THE END
> Reg Curtis- VE9RWC
> ............................................................................
> ..................
>
> At page 56 of the same issue is an article entitled "Police Volunteers:
> Taking a Higher Ground" by Michael Scholl. The thrust of the article is
> to welcome and encourage volunteer police on the ground that the
> potential terrorist threat is too great for existing departments to
> handle. Anyway, what caught my eye was the following from page 57.
>
> "Fortunately, there has yet to be a chemical attack or suicide bomber
> on U.S. soil. However, it appears that many Americans and law
> enforcement personnel believe that incidents of this type are a given
> and just a matter of time. It no longer seems to be a case of being
> vigilant at securing our borders. Intelligence indicates that
> terrorists and sleeper cells are already in America and have been here
> for years. Recent reports state that nuclear devices, smuggled in
> during the American/ Russian Cold War, may still be here and under the
> control of or being sought by Islamist extremists."
>
>
>
>
> >
>
Received on Sat Mar 02 2024 - 00:57:18 CST