4 Developments in PRC HUMINT Operations
4.4 Targeting of ROC Interests in Third Countries
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50 tourists to collect against more accessible targets allows the PRC to save more valuable agents for riskier missions.
In the broad picture, intelligence collection by Mainland tourists is likely to remain a small part of the PRC’s broader HUMINT operation against the island. Tourists still have limited access when it comes to possible surveillance and intelligence collection opportunities. The best HUMINT will most always come from insiders, who occupy sensitive positions in the
government, and those who have recently retired from government or military service.
Nonetheless, the Ma Zhong-fei case and the history of Cold War espionage shows that tourists can still make meaningful contributions to intelligence requirements.
4.4 Targeting of ROC Interests in Third Countries
One of the key developments in PRC HUMINT operations against Taiwan in the new millennia has been the emergence of high-level operations on the international stage. Several high profile espionage cases against Taiwan in third countries suggest that the PRC has broadened its strategy to pursue more aggressive HUMINT operations wherever significant ROC targets or interests exist. Until recently, the vast majority of PRC HUMINT operations in the West have been limited to the ‘thousand grains of sand’ approach, pursuing and recruiting well placed spies in government and military positions has been rare. Additionally, as Nicholas Eftimiades has
pointed out, the PRC’s spy agencies preferred to conduct aggressive operations on PRC soil. This is no longer the case. Several PRC HUMINT operations in the United States and Southeast Asia demonstrate that the MSS and the PLA Second Department are able, and actively conducting, aggressive spy recruitment in foreign countries.
In 2004 the PRC recruited one of its most valuable ROC spies in decades. Luo Hsien-che (羅賢哲), a Colonel in the ROC Army, was recruited to spy on behalf of China by an attractive young female agent. At the time, Luo was assigned to the ROC’s Economic and Cultural Office in Bangkok, Thailand. It appears that Luo may have been targeted using the classic “honey trap”
method. Additionally, he was also paid large sums of money, in total over 1 million US dollars, for his efforts. After returning to Taiwan, Luo was promoted to Major General in 2008 and assigned to work in the Army’s communications division. It was here that he had access to information on the Po-shen system, Taiwan’s new military command and control system.
Prosecutors who searched Lo’s office found documents relating to the Po-shen system as well as
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51 information related to Taiwan’s purchase of Apache attack helicopters and the army’s network of underground fiber optic cables. Luo was also deeply involved in military war games and was familiar with Taiwan’s defensive countermeasures against China. The fallout from this case was so serious that Ding Yu-chou (丁渝洲), a former member of Taiwan’s National Security Council, said that the military’s plans for repelling invading forces needs to be rethought following the Luo spy case.
That the PRC could recruit Luo in Thailand shows that China has a capable network of MSS and 2PLA agents stationed abroad. It would have taken some effort to spot and asses Luo as a potential spy. This would generally not be an easy task given that military attaches like General Luo are seasoned intelligence professionals who are trained to be on their guard against hostile foreign agents.
A high level target like Luo would most likely be handled by seasoned veterans in the MSS or 2PLA. The large sums of money paid to Luo, in excess of one million U.S. dollars, further illustrates the value and importance which the PRC placed on Luo and his information.
The fact that Luo’s contact also had an Australian passport raises several important questions and it also demonstrates the growing capability and sophistication of PRC intelligence agencies. It is possible that Luo’s contact had been sent to Australia by PRC intelligence to gain citizenship and undertake long-term espionage operations. It is also possible PRC intelligence is still actively forging passports.
The first question is whether the PRC falsified the passport or did the agent obtain it through legal residency in Australia? The passport could certainly have been falsified. The PRC has a history of falsifying foreign passports that goes back to at least the 1980’s.117 At that time, PRC agents had successfully entered Taiwan using fake Singaporean and Thai passports. The PRC would not be the first country to forge an Australian passport. Evidence suggests that Israel’s Mossad agents have frequently forged or used stolen Australian passports as a cover for their operations.118 However, in the case of Israel’s Mossad agents using forged Australian passports, the Australian government voiced a strong diplomatic protest against Israel. In contrast, the Australian government appears not to have lodged any protest against China. This supports the possibility that the passport may not have been forged.
117 Nicholas Eftimiades, Chinese Intelligence Operations, (Arlington: Newcomb Publishers, 1998)
118 Jonathan Pearlmen, “Australia warns Israel on Dubai assassination plot” The Sydney Morning Herald, February 25, 2010
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52 It is possible that the female agent had been sent to Australia in order to gain citizenship and conduct long-term operations. Gaining Australian citizenship would have provided the agent with a great deal of mobility and access to Western countries. Lo and his contact meet repeatedly in the United States to exchange information. A falsified passport would have increased the chances of the agent being discovered, especially if she travelled frequently to the US where post-911 security precautions would have made such endeavors more risky.
In either case, the question of the female agent’s passport does suggest some important developments in PRC HUMINT operations. If the passport was forged then it shows that China is willing and able to successfully forge Western passports and use them for international
operations. If the agent gained the passport by immigrating to Australia then it can be concluded that China is planting trained MSS or 2PLA agents abroad for deep cover operations
It is possible that Chinese intelligence operatives utilized an agent with a Western passport to lower Lo’s guard to the potential threat. The MSS has a long and fairly successful history of using female agents to entrap targets.119 A female PRC national would have immediately aroused suspicion if she had attempted to initiate a romantic relationship with a military attaché.
Using the cover of Australian citizenship may have played some role in lowering Lo’s guard just enough to enable the agent to engage in romantic overtures.
An earlier espionage case shows that the MSS was aggressively targeting Taiwan agents abroad as early as the mid-1990s. Liao Hsien-ping (廖憲平), a former MIB agent, was convicted of fraud in 1995 by the Philippine government and incarcerated in a local prison. Interestingly, he was bailed out of jail two years later by PRC officials who then recruited him to spy against Taiwan. Liao also spent some time in the PRC for training before he was eventually sent back to Taiwan to spy on Falun Gong members.
The fact that PRC intelligence agents bailed Liao out of a Philippine prison in 1997 shows that they were highly opportunistic and aggressive in pursuing avenues for espionage against the ROC even at that time. It probably would have taken some planning and finesse for the PRC to secure Liao’s release and extradite him to China. PRC officials seeking the release of an ROC prisoner would certainly have caught the attention of Philippine government officials.
The PRC could have easily bribed local officials but they would have to have done it carefully in order to avoid arousing attention.
119 Nicholas Eftimiades, Chinese Intelligence Operations, (Arlington: Newcomb Publishers, 1998) 60
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53 Further facts surrounding the Liao case suggest that ROC security and law enforcement agencies were very complacent in their handling of the matter. It appears that ROC officials in the Philippines were either unaware, or could not prevent Liao’s release and extradition to Hong Kong or China The fact that Liao had been privy to ROC secrets and methods of operation
should have made him a serious concern for ROC officials in the Philippines and MIB leadership.
Additionally, it is questionable whether ROC security and law enforcement agencies conducted very much investigation on Liao once he returned to Taiwan. Liao was able to operate in Taiwan for four years before he was caught. Moreover, he successfully recruited two former colleagues to assist him in his spying efforts. Zhang Tzu-xin (張祖馨) , a retired colonel in the ROC military, and Sung Wan-ling (宋婉玲) , an employee at the National Police Agency Immigration Office both admitted to helping Liao.
4.5 Expansion and targeting of ROC interests in the United States
In recent years, PRC HUMINT operations have also experienced success against ROC interests in the United States. In 2008 and 2009, two serious spy cases were uncovered which involved PRC operations against Taiwan. In 2008 Greg Bergersen, an employee at the US DOD’s Defense Security Cooperation Agency, was found to have provided sensitive military information to a PRC agent. The next year, another DOC civilian employee, James Fondren was caught providing sensitive information to the same PRC agent.
The Bergersen and Fondren cases are important for several reasons. First, the targeting and recruitment of US DOC officials marks an escalation in seriousness. Whereas collecting small pieces of technical information usually receive less attention, recruiting spies in a host nation’s military community has deeper implications. These two cases can only have
strengthened the view that China is a serious threat to US intelligence and security interests. PRC HUMINT operations on US soil will have a broad influence on how the PRC is perceived in the US defense and security community. Past and future espionage cases of this proportion could very well be used to strengthen the argument that China is a military and security competitor, rather than a potential partner of the United States. PRC leaders must certainly be aware of the impact which aggressive espionage operations have on the US DOD. It thus appears that China has prioritized its efforts to aggressively collect intelligence against Taiwan over its desire to appear benign and friendly towards the United States.
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54 The fact that the PRC is undertaking sensitive and sophisticated HUMINT operations against Taiwan in the United States suggests that they can and will potentially target ROC interests anywhere in the world. China has a lot at stake in its relationship with the US. If PRC leaders are willing to deal with potential repercussions from the US then they could likely endure any potential protests from less powerful nations. Additionally, the United States maintains one of the largest and most sophisticated law enforcement and security systems in the world. If the PRC can be successful in the US, then it suggests that they could be successful in all but the most closed nations of the world.
China’s increased HUMINT activity against ROC interests abroad is likely due to a combination of factors. First, this increase was likely partly a reaction to the Lee and Chen Administration’s desire to increase Taiwan’s international space and the increase in
independence rhetoric. Chen Shui-bian was particularly active in pursuing international support for Taiwan and communication between Beijing and Taipei was severely limited. Additionally, the Taiwan Security Enhancement Act, passed by US congress in 1999, paved the way for deeper military support and cooperation between Taiwan and the United States. Annual meetings between military planners from both governments helped Taiwan improve its defense planning.
This deepened interaction, combined with the Bush Administration’s robust weapons package to Taiwan likely caused Beijing to re-evaluate its intelligence priorities and strengthen its HUMINT efforts against ROC targets abroad. PRC leaders have always strenuously objected to US weapon sales to Taiwan. It is certainly more than a coincidence that two of the most sensitive espionage cases against the US by China involved US weapon sales to the island.
The ROC’s economic and diplomatic interests in Southeast Asia are strong and it’s no surprise that the PRC has undertaken HUMINT operations against Taiwan in this region.
Southeast Asia provides a significant amount of production for Taiwanese companies after the PRC. Lee Deng-hui’s Go South Policy sought to increase Taiwanese investment in Southeast Asia at the expense of China during the 1990s. Lee was also able to meet with leaders from Thailand and Indonesia during his vacation diplomacy visits to the region. Taiwan has long sought to establish free trade agreements with Southeast Asian nations but Beijing has sought to control and define this economic relationship. According to a KMT spokesperson, several ASEAN nations indicated to ROC officials that Taiwan would first have to seek Beijing’s approval in order to establish an FTA. This was one of the factors in Taiwan’s desire to enter
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55 into the ECFA agreement with Mainland China.120
Increased PRC HUMINT operations abroad against ROC interests is most likely also due to a general increase in PRC espionage operations worldwide. As discussed earlier, China’s intelligence budget is likely to have received double digit funding increases in line with the increases in the defense budget. This would naturally translate into increased manpower and operations in places where the PRC has priority intelligence requirements. With greater resources available, MSS and 2PLA units abroad would have been able to increase their operations against ROC targets and individuals of interest.
4.6 Increased recruitment of non-ethnic Chinese
The targeting and recruitment of Greg Bergersen and James Fondren also marks the emergence of a new strategy in PRC espionage against the US. Until recently, Chinese intelligence agencies preferred to target and recruit Chinese immigrants abroad to conduct espionage against the host country. They rarely, if ever, attempted to recruit spies who were not ethnic Chinese. Chinese espionage expert Paul Moore described the PRC approach to recruiting spies in the US as “soft recruitment.” 121 According to Moore, Chinese intelligence agents condition the targeted
individual to see himself as a friend of China. They attempt to make the person feel that they are more Chinese than American and that they have a special duty to help China. In recruiting target individuals, PRC agents often emphasize the idea that the person is just helping China and not really hurting America. PRC intelligence agencies have also tended to distrust individuals who were not ethnic Chinese.122 They have generally been more comfortable going after people who have a shared language, culture and history. In general, PRC intelligence organizations seem to have more success in recruiting people who have close connections to China. Second and third generation ethnic Chinese who have assimilated into the local culture are much less likely to commit espionage on the PRC’s behalf. Of the 11 publicized espionage cases by ethnic Chinese in the United States in 2010, 10 of the individuals were first generation Chinese.123 Some of these individuals were PRC citizens who were living and working in the US and a few had
120 郭的光 Spokesman at KMT Headquarters, May 5, 2009
121 Paul Moore “How China Plays the Ethnic Card” LA Times, June 24, 1999
122 Sean Noonan “Chinese Industrial Espionage Makes Inroads in the US and Europe” Stratfor, January 24, 2011
123 Ibid
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56 acquired US citizenship. The PRC’s preference to recruit ethnic Chinese spies is also used in other countries like Japan which harbors a large Chinese immigrant population.124
This new development in Chinese recruitment strategy appears to have been at least partly brought about by the PRC’s high emphasis on ROC-related issues. The PRC had already begun attempting to recruit non-ethnic Chinese to spy against the US as early as 2004. However, the PRC’s first successful efforts to target non-ethnic Chinese sources, Fondren and Bergersen, were both US government employees who were working on Taiwan related issues.
4.7 Targeting of Taiwanese in the PRC
One of the most advantageous new recruiting grounds for PRC espionage against Taiwan is the Mainland itself. Since the late 1980s, Taiwanese citizens have been traveling to, and taking up residence, in the Mainland in ever greater numbers. There are now more than half a million Taiwanese who reside in the PRC permanently or for long periods of time. This group provides PRC intelligence agencies with a potentially large pool of educated, and often
well-connected, Taiwanese individuals to recruit from.
The fact that the PRC is operating on its home turf provides several critical advantages.
First, PRC intelligence agents are operating in a friendly environment where they have the full support of local governments. The PRC has a massive internal security and police force with several specialized organizations which maintain security and collect information on individuals of interest. In addition to local police forces, the PRC also relies upon the People’s Armed Police (PAP), and the Ministry of Public Security to maintain order.
Secondly, MSS and PSB agents are under little, if any, real risk of surveillance or opposition by foreign governments. Whereas operations in Taiwan and the West are potentially dangerous due to local security and law enforcement agencies, no such opposition group is present in the PRC. It is simply impossible for foreign security organizations to conduct meaningful surveillance and counter-espionage operations in the PRC.
Finally, PRC intelligence officers can use a wide variety of incentives and threats against Taiwanese businessmen whom they seek to attract. Financial incentives are common but the
124 Jane’s, pg.113
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57 PRC has also been known to use entrapment and coercive methods against Taiwanese in the PRC. In 2012, a Taiwanese businessman in Mainland China was pressured to spy for the PRC by officials who threatened to close his business if he did not agree to spy for China. PRC officials were interested in this individual, surnamed Zhen, because he had a friend who worked at the ROC’s MIB. These officials attempted to use Zhen to persuade his friend to spy for the PRC.125
PRC espionage against ROC citizens in the Mainland generally targets two groups;
businessmen and retired ROC military officers and government officials. Since 1994 there have been at least five known cases of Taiwanese businessmen being recruited to spy against Taiwan while living in the PRC.126 An additional case involved a Taiwanese antique dealer who lived in the Mainland and served as a courier of secrets for a retired ROC officer.127
Retired and visiting ROC military and government officials in the PRC are a lucrative target for PRC intelligence and the most serious security risk for Taiwan. The information and experience which these individuals retain makes them much more valuable than ordinary
businessmen. Retired ROC military officers are visiting and relocating to the Mainland in greater numbers. According to ROC defense officials, in 2002 there were roughly 3,000 former ROC military officers doing business in the PRC.128 Furthermore, the waiting period which these officers are required to observe before they can travel to the Mainland has been reduced to just
businessmen. Retired ROC military officers are visiting and relocating to the Mainland in greater numbers. According to ROC defense officials, in 2002 there were roughly 3,000 former ROC military officers doing business in the PRC.128 Furthermore, the waiting period which these officers are required to observe before they can travel to the Mainland has been reduced to just