More history - is it confirmed looking back now?
CLINTON: Chinese trade coup staggers US spy chiefs
Sunday Times
November 10 1996
Chinese trade coup staggers US spy chiefs
by James Adams in Washington
PRESIDENT Bill Clinton may have been the victim of a massive Chinese
espionage operation intended to gather top-secret information on
American trade and economic policy, according to intelligence
officials and Republican sources.
The CIA and Congress have launched investigations into what appears to
have been a stunning intelligence coup by China. In a four-year
operation, Chinese agents were able to take advantage of lax security
procedures and a pattern of corruption in the Clinton administration
to get routine access for their friends and associates to the highest
levels of the administration, including the Oval Office.
In return, China was able to lobby for the retention of most favoured
nation status, worth billions of dollars a year to Peking, and have
advanced knowledge of America's negotiating positions in trade and
economic talks as well as access to trade deals subsidised by America.
"It's bad," said one intelligence source. "The Chinese have clearly
pulled off the kind of coup we would have loved to have done."
The operation will be the focus of an investigation by the House
oversight committee, expected when Congress resumes in January. A
dossier prepared for the committee details "People's Republic of China
Intelligence Penetration" of the Clinton administration.
The investigation is certain to destroy any vestige of "bipartisan
co-operation" that some Republicans and Democrats hoped to see in
Clinton's second term. Some Republicans believe that the evidence is
so damaging that senior administration officials are certain to be
indicted.
Fears of a Chinese intelligence scam stem from an investigation into
the millions of dollars the Democrats received in illegal campaign
contributions over the past four years. The Clinton administration
gave high-level access to donors to lobby officials and paid them off
with generous subsidised trade deals.
Until now, this has been regarded as an example of corruption in the
Clinton administration. Now it is suspected much more was involved and
that the First Bureau of the military intelligence department in
China, responsible for gathering intelligence abroad, was the big
winner.
Investigators are focusing on the Chinese Resources Bank, based in
Hong Kong and officially the commercial arm of China's ministry of
foreign trade and economic co-operation. However, according to western
intelligence sources, the bank is a front for Chinese intelligence.
"A vice-president of the China Resources Holding Company in Hong Kong
is traditionally a military case officer," said Nicholas Eftimiades, a
China specialist with the Defence Intelligence Agency. "This officer
coordinates the collection activities of other intelligence personnel
operating under [China Resources] cover."
In what appears to have been a classic espionage operation launched
days after Clinton was elected in November 1992, China Resources
purchased at a discount a 15% share in the Hong Kong Chinese Bank,
which is owned by the Lippo Group, the Indonesian conglomerate with
close ties to Clinton.
Eight months later, after the Lippo Group had demonstrated it had
direct access to the Oval Office and was able to influence American
foreign policy, China Resources increased its shareholding in the bank
to 50%. This time, the Chinese paid a 50% premium and gave Lippo a
profit of about œ12m. A key figure in the affair is John Huang, a
former Taiwanese air force officer. Born in China, he joined the Hong
Kong Chinese Bank and in the mid-1980s moved to Little Rock, Arkansas,
helping to establish Lippo's operations in Arkansas and getting to
know Bill and Hillary Clinton well.
In January 1994, on the personal instructions of Ron Brown, the
commerce secretary, Huang was given top-secret security clearance
without background checks by the FBI or the state depart ment's Office
of Security a strict requirement for somebody born in a foreign
country.
This gave him access to vital American intelligence. Six months later,
he was given a post in the commerce department and went with Brown on
a trade mission to Peking.
"By the time Brown and Huang went to China in July 1994, there was
$5.5 billion (œ3.3 billion) in deals ready to be signed," said a
Republican investigator. "Never in the history of America's trade
relations with China has so much been put together so fast."
In the commerce department, Huang had access to much of the
intelligence delivered daily to the department by the CIA that relates
to economic and trade secrets gathered around the world. He also
received weekly intelligence briefings from the CIA.
Shortly before joining the administration, Huang was given a $900,000
pay-off by the Lippo Group. However, he continued to keep in close
touch with Mochtar Riady, his former boss at the Lippo Group.
Huang was also busy as a fundraiser for the Democrats, generating $5m
in the past 12 months, including a $450,000 donation from Lippo. Some
of those donations were illegal and in the past month the Democrats
have returned $500,000.
In the past two years Huang has visited the White House about 70 times
and had several meetings with Clinton unprecedented access for a
relatively low-level official.
Riady himself made six trips to Washington in Clinton's first term and
met the president several times on each visit. In September 1995 Riady
and Huang met Clinton and pressed for the retention of China's most
favoured nation status.
At the least, the result of this lobbying appears to have been
sweetheart deals for Lippo involving billions of dollars, some of
which were under written by the US Export-Import Bank. At the same
time, Clinton softened his stance against Indonesia's labour practices
that had been attacked by Amnesty International.
"What you seem to have here is a classic intelligence operation that
took advantage of every opportunity presented," said one Republican
source. "For a relatively modest investment, a foreign government
gains access to the president, to lucrative trade deals and has a
direct influence on our foreign policy. Who could ask for more?"
The White House is worried. Officials privately are pointing the
finger at Brown, who was killed in an air crash earlier this year.
"It's clear that Brown was running an illegal operation," said one.
"But how do you vilify a dead man who's a hero to the Democratic
party?"
I remember when BROWN blew up - seemed fishy to me at the time - did the cia jackals get him too late? |
