A Counterintelligence Reader, Volume 4 Chapter 1
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CHAPTER 1 INTRODUCTION In 1978, a series of unoffi cial exchange visits After the release of the Cox Report, President between US nuclear weapons experts and their William Clinton requested the President’s Foreign People’s Republic of China (PRC) counterparts Intelligence Advisory Board (PFIAB), chaired began. The PRC offi cials made a serious by former Senator Walter Rudman, to review concentrated effort to cultivate close relationships the security threat at DOE’s nuclear weapons with certain US experts. Over the subsequent laboratories and the measures taken to address 23 years, as a result of this exchange, the PRC that threat. In June 1999, the PFIAB presented its made major strides in the development of nuclear report to the President. The report found that DOE weapons, including the neutron bomb. “is a dysfunctional bureaucracy that has proven it is incapable of reforming itself.” Beginning in 1998, US media sources began reporting about ongoing investigations of four In 1999, the press reported about an investigation by cases of suspected Chinese espionage against the the FBI against a Taiwan-born Chinese American United States dating back to the 1980s. The most scientist, Wen Ho Lee, who downloaded critical serious case involved China’s alleged acquisition of nuclear weapons codes, called legacy codes, from key information about our nation’s most advanced a classifi ed computer system at Los Alamos to an miniaturized US nuclear warhead, the W-88, as unclassifi ed system accessible by anyone with the well as serious security breaches at the Department proper password. Suspected of espionage, Wen Ho of Energy’s (DOE) Los Alamos Laboratory Lee was charged with only one count of mishandling between 1984 and 1988. national security information to which he pled guilty and sentenced to time served. The FBI came under Early in 1998, Congressional focus turned to US heavy criticism that it mishandled the investigation satellite exports to China. A US Department of and exaggerated the case against Lee. Defense classifi ed report concluded that scientists from Hughes and Loral Space and Communications, Congressional concern over security at the nuclear involved in studying the 1996 crash of a Chinese weapons laboratories increased again in June rocket launching a Loral satellite, provided scientifi c 2000 when it was discovered that computer hard expertise to China that notably improved the drives containing nuclear weapons information reliability of China’s missile launch abilities. disappeared at Los Alamos. The drives later turned up, and a FBI investigation of the missing failed to After this information was published in the US determine who took them. media, a special House Select Committee and a number of Senate committees investigated US A major crisis between China and the United States technology transfer policy with respect to China. occurred when a US Navy EP-3 reconnaissance The result was the release of the Report of the aircraft, conducting a routine and solo Select Committee on U.S. National Security and reconnaissance mission approximately 50 to 60 Military/Commercial Concerns With the People’s miles off the Chinese coast, collided with a Chinese Republic of China (the Cox Report). The report jet fi ghter on 1 April 2001. The Chinese fi ghter dealt, among other things, with the possible crashed, and the pilot died. The US Navy plane compromise of highly classifi ed information on made an emergency landing at a military base on DOE’s nuclear weapons laboratories. China’s Hainan Island. The Chinese held the Navy 1 crew for 11 days and released them only when the Chinese intelligence, like those of other countries US Ambassador delivered a letter of regret over the in the post–Cold War era, has increasingly intrusion of China’s airspace and landing without focused on economic, industrial, commercial, verbal clearance from the Chinese. and technological information. There have been reports of Chinese companies in the United States In 1999, the American press began to publish being connected to China’s military industrial articles that stated the Chinese Government was complex through which American technologies arresting prominent activists and handing out are allegedly being transferred back to China. In harsh jail sentences for reasonable civil liberties. addition, corporate espionage and illegal transfer On 15 August 1999 two independent researchers, of American technology will increase as the United one of whom was an American, were arrested for States and China expands their relationship both conducting interviews about a pending World Bank politically and commercially. project. During an interrogation by Chinese security offi cials, the American was seriously injured when he jumped out of a third story window. In early 2000, Chinese authorities initiated a major crackdown against overseas Chinese visitors, some of whom had US connections. They arrested eight American citizens or permanent residents of the United States. The arrests clouded bilateral relations between the United States and China and were raised at the highest political level. Several were subsequently tried, convicted, and allowed to leave China. 2 Huang Dao Pei Peter H. Lee—Update1 The FBI arrested Huang Dao Pei, a Chinese-born On 26 March 1998, Dr. Peter S. Lee, the nuclear naturalized US citizen living in Piscataway, New physicist convicted of two felony counts including Jersey, on 28 July 1998 on charges he tried to steal passing classifi ed national defense information trade secrets for a hepatitis C monitoring kit he to PRC representatives, was sentenced to spend hoped to sell in China. Huang, a former scientist one year in a community corrections facility. In who worked at Roche Diagnostics from 1992 to addition to the one-year term, he was ordered to 1995, allegedly tried to buy information from a serve three years of probation, perform 3,000 hours scientist who worked for Roche. The scientist was of community service, and pay $20,000 in fi nes. cooperating with the FBI. In a case apparently involving empathy instead of According to court papers, Huang telephoned the greed, Lee admitted under a plea bargain agreement cooperating scientist on two occasions asking on 7 December 1997, that he passed classifi ed for specifi c documents that would help him defense secrets to the Chinese Government in duplicate parts of the kit. Huang promised to pay 1985 while working as a research physicist at Los the scientist for the risk involved in obtaining the Alamos National Laboratory. Lee, a naturalized documents. He told the scientist he needed the US citizen who was born in Taiwan, was working information so his fi rm, LCC Enterprises, could on classifi ed projects relating to the use of lasers develop a similar kit and sell it in China. to simulate nuclear detonations. The information was declassifi ed in the early 1990s. He was fi red by As reported in the open press, the FBI declined to TRW on the same day he pleaded guilty. say whether Huang was working for the Chinese, but it was noted that China is among the most Lee passed the classifi ed information in 1985 while aggressive countries going after US trade secrets. he was doing research at the Los Alamos National A Roche representative stated that, if a competitor Laboratory in New Mexico. Lee had traveled to were to obtain the information sought by Huang, China where he was asked by a Chinese scientist to it could avoid spending the millions of dollars and discuss the construction of hohlraums, a diagnostic years that Roche spent developing the product. device used in conjunction with lasers to create microscopic nuclear detonations. The day after he initially revealed the classifi ed information, Lee gave a lecture to about 30 Chinese nuclear scientists in which he again gave away secret restricted data regarding the manufacture and use of hohlraums. Lee told the FBI that he disclosed the information because he wanted to help his Chinese counterparts, and he wanted to enhance his reputation there. The second charge against Lee concerns disclosures he failed to make in 1997 while he was working on classifi ed research projects for TRW. Before he traveled to China on vacation, Lee was required to fi ll out a security form in which he stated that he would not be giving lectures on his work during his trip. Upon his return, he had to fi ll out a second form in which he confi rmed that he did not give any lectures of a technical nature. 3 However, as Lee later confessed to the FBI, he The Cox Report lied on both forms because he intended to and did, in fact, deliver lectures to Chinese scientists that (Editor’s Note: This edited version of the report discussed his work at TRW. written by the Select Committee on U.S. National Security and Military/Commercial Concerns with The People’s Republic of China [referred to as the Endnote Cox Committee] is printed verbatim. This edited 1 For previous information on Peter Lee, see version of the Committee’s report [known as the Counterintelligence Reader, Volume III, p. 410. Cox Report] concentrates on China’s collection methodologies in obtaining US technology and the US investigation of those methodologies.) It is extremely diffi cult to meet the challenge of the PRC’s technology acquisition efforts in the United States with traditional counterintelligence techniques that were applied to the Soviet Union. Whereas Russians were severely restricted in their ability to enter the United States or to travel within it, visiting PRC nationals, most of whom, come to pursue lawful objectives, are not so restricted. Yet the PRC employs all types of people, organizations, and collection operations to acquire sensitive technology: threats to national security can come from PRC scientists, students, business people, or bureaucrats, in addition to professional civilian and military intelligence operations.