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