Tiger Trap: America's Secret Spy War With China (3 page)

Nicholas Eftimiades, a China analyst for the Defense Intelligence Agency, told the congressional Joint Economic Committee that it is easy to tell the difference between a Chinese intelligence officer and a co-opted scientist—intelligence officers sent abroad generally lack technical knowledge, and the scientists co-opted by the MSS usually have no training in clandestine work. "For example, at a trade show in Paris, French military investigators observed members of a Chinese scientific delegation discreetly dipping their ties
in a photo processing solution made by the German firm Agfa. The goal of this clumsy act of espionage was presumably to obtain specimens of the solution for later analysis."

The DIA analyst testified that foreign visitors in China are subject to the "aggressive use of technical surveillance measures." Many of the better hotels that cater to foreigners are equipped with bugs and cameras to record their activities. "Surveillance of foreigners in these and other Chinese hotels is carried out by the MSS's technical operations department," he said. "According to Chinese prostitutes who frequent the Jianguo Hotel, the guest rooms used by foreign businessmen there also contain microphones."

Spying is often described as the world's second oldest profession. And China, like many other countries, has used sex for purposes of espionage or blackmail.

By far the most bizarre example of the use of sex by Chinese intelligence is the case of Bernard Boursicot,
a French diplomat in China who for twenty years carried on a love affair with Shi Peipu, a famous singer at the Beijing Opera, where female roles are often played by men. There was one little problem with the woman Boursicot considered the love of his life: she was a man.

Boursicot was arrested in Paris in 1983 and tried with Shi, who had moved there and was living with him. The diplomat testified that an officer of Chinese intelligence, whom he knew only as "Kang," had approached him in Beijing and said he would be allowed to continue the affair only if he provided information from the French embassy. He did, giving 150 documents to Shi, who passed them to Kang.

At his trial, when the judge asked how Boursicot, a Frenchman, after all, could have been fooled for twenty years, he testified, "I was shattered to learn that he is a man." Their sexual encounters, he explained further, had been fast and always in the dark. "He was very shy," Boursicot said. "I thought it was a Chinese custom."

Boursicot and Shi Peipu were sentenced to six years in prison. In 1987 President François Mitterrand pardoned Shi, but not Boursicot. The following year their affair became the basis for a hit Broadway play,
M. Butterfly,
by David Hwang, with a musical nod to Giacomo Puccini. In 1993 it became a film starring Jeremy Irons.

Diplomats who stray make easy targets, but Chinese intelligence operations are rarely that predictable. Because of the way China spies, it is harder for US counterintelligence to discover evidence of espionage. "If they don't pay money that means there's no money trail to follow," Paul Moore points out. "Bank accounts don't help you. If a case moves into a criminal investigation, how are you going to prove it to a jury?

"China is not interested in working with people motivated by revenge. We [the United States] love revenge as a motivating factor. Historically, the number one reason people betray the US is money, and the second reason is revenge. It is not normal Chinese practice to deal with people who have psychological or emotional problems, people who are misfits, or lonely."

Whenever a mole is discovered inside US intelligence, the counterintelligence experts try to determine what factors led to the betrayal and might have been detected in advance. Aldrich Ames, the CIA Soviet counterintelligence officer, had a severe drinking problem. So did Edward Lee Howard, the CIA officer who fled to Moscow in 1985 after betraying the agency's secrets to the KGB.

But looking for employees inside American intelligence who have a severe drinking problem or some other personal aberration would in all likelihood not help to uncover a Chinese mole inside the CIA, the FBI, or the national weapons labs. Because China would normally prefer not to deal with them.

Moore elaborated on the point. "To protect our country we have all the CI [counterintelligence] units in the government, and the security guys, the polygraph operators, and they ask about drinking and money, and talk to neighbors for background information. All the security guys are looking for vulnerabilities. If the Chinese are not looking for people with vulnerabilities, when we screen out people with vulnerabilities we don't find the people they are using."

For twenty years, Moore was the FBI's chief China analyst, toiling away in the bureau's CI-3B unit at headquarters. He developed a set of two dozen rules that he believed could apply to Chinese intelligence cases. Three are of particular importance.

First, China does not, in most instances, offer money in exchange for information.

Second, China does not accept typical walk-in cases, because of the possibility that "volunteers" are being dangled as bait by an opposition intelligence service. By contrast, some of the KGB's biggest coups came from walk-ins, not only Ames but John A. Walker Jr., a former Navy chief warrant officer who, with his son, brother, and a friend, sold the Navy's codes and spied for the Soviets for eighteen years.
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Moore's third rule is that China "collects information from good people, people who don't have financial problems, don't have emotional problems, who are not motivated by revenge, not unsuccessful in their lives. Not someone who is lonely, needs a friend, needs a woman.

"China is looking to get good people to do bad things. How do you recruit a good person? You get a good person to do this by convincing him it would be good to help China. China is a poor country, they say, and somebody has to help them modernize, improve their defense system. We need people to help us a little bit. The idea is to convince someone that what he is actually doing is good. You don't talk about the fact that he would be betraying a trust. They say, 'We think you have an affirmative obligation to help China modernize.'

"The metaphor is sex: you are trying to woo a woman and get her to go to bed. At least in my time, if you said would you go upstairs and have sex, the answer was usually no. But getting a kiss, the answer might be different. You would try to build from that kiss onward to greater things. That's what's going on here, seduction. The targets are being led astray in small increments. You have little bits of espionage."

According to Nicholas Eftimiades, China's economic espionage follows a three-pronged pattern. First, persons are recruited in China and asked to acquire specific technological information when they travel abroad. Second, some American technology companies "are purchased outright by Chinese state-run firms."
And third, high-tech equipment is purchased by front companies, often operating out of Hong Kong.

One survey prepared for government agencies, the
Intelligence Threat Handbook,
estimates that China has more than 2,600 diplomatic and commercial officials in the United States, of whom a "substantial percentage" are "actively involved in collecting intelligence." More than 127,000 students from the People's Republic of China attend schools in the United States, "and many of these students have been tasked to collect information by the Chinese government," the handbook asserts. In addition, "over 25,000 Chinese visit the United States each year as members of official delegations."

American technology continues to be a major focus of Chinese espionage in the United States. A great many cases of espionage or technology transfer to China are centered in California, with its large defense and aerospace industries, and the computer-technology companies centered in Silicon Valley. All are tempting targets for Beijing.

California also has by far the nation's largest ethnic Chinese population, a total of 1.2 million people, by the latest Census Bureau survey released in 2010. That in turn creates a delicate problem for FBI counterintelligence agents investigating possible espionage cases in California that involve ethnic Chinese. Without question, the vast majority of the 3 million people of Chinese background in the United States are loyal Americans.
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It is a fact of life, however, that China often tries to enlist ethnic Chinese in its intelligence efforts.

A joint CIA/FBI report to Congress in 1999 touched on the sensitive issue. "Because most Chinese share a common cultural and historical background, Chinese leaders refer to all individuals of Chinese ancestry as 'overseas' Chinese. When approaching an individual of Chinese origin, the Chinese intelligence services attempt to secure his or her cooperation by playing on this shared ancestry."

Bruce Carlson, a Chinese counterintelligence specialist who headed the China section of the FBI from 2006 to 2008, makes a distinction between immigrants and later generations. "It's true that China targets ethnic Chinese," he said. "When immigrants first come here they have 'one foot in each boat,' or so China thinks. They may be more approachable by the PRC. It's easier to appeal to the motherland with immigrants. But it's much harder to appeal to the motherland with the second generation, and with those who do not speak Chinese. They are no more likely to commit espionage than any other American."

Paul Moore said that Chinese intelligence has been successful in persuading some people to "help China modernize." According to Moore, "It turns out in agent cases where China developed someone to provide information, 98 percent were ethnic Chinese, 2 percent were not. Even the 2 percent felt an obligation to help China modernize. Normally these were people who had studied Chinese, traveled to China, or bought into Chinese culture.

"Chinese agent cases, where they recruit an agent, are mostly ethnic. Are we looking for the Chinese espionage gene? Everybody realizes that's ridiculous. The Chinese are running in their mainstream ops a program that collects intelligence but is not really an intelligence program. They want to develop relations with people who think they have an obligation to help China modernize. And who will make a little contribution. This is their sales pitch. And it turns out it will only resonate with people who have Chinese ancestry. It won't resonate with the McGillicuddys because the McGillicuddys don't give a shit about helping China modernize. What's really going on here is a marketing campaign, to sell China. It doesn't work very well, the answer usually is no. It's about as successful as telemarketing. This is a campaign which is not very efficient.

"Most who do cooperate with China are FOB, fresh off the boat, first-generation immigrants. Their grandchildren are no more susceptible than the O'Reillys or the Kowalskis. This is not a Chinese thing—it is a Chinese-immigrant thing. They are doing it because they feel it's the right thing to do."

US counterintelligence officials pursuing a spy suspect may overlook a broader point, Moore contended. "China was collecting information from the national labs and they were very successful in doing that. When the Chinese collect we lose, they gain, and they create a capability to do it again. We usually are so focused on the specifics of what they may be getting that we lose sight of the most important part—which is they are developing a capability to do it again."

Moore offered a final thought about the difficulties of catching China's spies. "Normally the Chinese are able to commit espionage against the US without leaving evidence behind," he said. "If you do have enough evidence to make a case, normally somebody in China has made a mistake."

Chapter 2

PARLOR MAID

I
N DECEMBER
1990, their work in China done, Bill Cleveland and I. C. Smith returned to the United States. Several weeks later, Cleveland called Smith from San Francisco. "I. C., they knew we were coming before we even left,"
he said.

It was true. The proof was contained in an audiotape, made months earlier, that the government possessed but had not yet analyzed. Counterintelligence agents didn't realize what they had. The tape was an intercept by the National Security Agency of a conversation in Mandarin between a woman in Los Angeles, who used the code name Luo, and her MSS handler in Beijing, named, of all things, Mao.

The NSA, based in Fort Meade, Maryland, forwarded the tape to FBI headquarters in Washington. From there, it was sent on to the San Francisco field office, where most of the bureau's Chinese translators are based. Which is why, early in 1991, the tape eventually made its way to the desk of Bill Cleveland, chief of the Chinese counterintelligence squad in San Francisco.

Among other matters, the woman on the tape revealed to Mao that William Cleveland of the FBI was planning a trip to China—the trip from which he had just returned. The words on the tape were a bombshell.

Cleveland's heart sank, because he instantly recognized the woman's voice as that of Katrina Leung. Her friends knew her only as a high-profile leader of the Chinese American community in Los Angeles. But for almost two decades, she would serve as the FBI's premier secret source of intelligence on China, the Communist Party leadership in Beijing, and the MSS. For her services, the FBI would pay her more than $1.7 million.

Cleveland knew the voice on the audiotape right away because he was familiar, in fact intimately familiar, with the voice. He had become Katrina Leung's lover three years earlier.

Leung had been recruited in Los Angeles in 1982 by another FBI man, Special Agent James J. Smith, and given the code name
PARLOR MAID
. Since bureau informants are assigned a secret three-digit code name, Leung was also carried on the FBI rolls as "Bureau Source 410." She was thirty-one; J.J., as he was universally known, was eight years older.

Almost from the start, J.J. had begun a sexual relationship of his own with Ms. Leung,
whose biochemist husband, Kam, would later insist that he was unaware as the years rolled by that he was sharing his wife with not one but two agents of the Federal Bureau of Investigation.