Surprising lapses aided Chinese espionage

One private American security guard for a US satellite launch in China reported to duty carrying a sleeping bag. Another pushed a table out of view of surveillance cameras and took a nap.

Still others left windows unlocked, doors unsealed, and sensitive equipment and documents unguarded from Chinese technicians. They came to work inebriated; after work they consorted illegally with Chinese women.

The security so irked one US official assigned to monitor a launch in China that he decided to test whether he could break into the satellite processing building. He got in, sidled up to the security supervisor undetected, and tapped him on the shoulder.

Such security lapses are not isolated, according to a congressional report on Chinese espionage released last week. Rather, they are emblematic of a sometimes stunning lack of vigilance by US government and industry in safeguarding weapons-related secrets from the agents of China's military modernization.

For two decades, China has enjoyed unprecedented opportunities to gather intelligence not only on US satellites and rocketry, but also on a wide range of military technology, says the report by the House select committee on China, chaired by Rep. Christopher Cox (R) of California.

Indeed, the report paints a disturbing picture of an almost sieve-like leakage of American secrets, caused by four main factors: lax counterintelligence measures, loosened export controls, a willingness of US firms to subordinate security to profit, and the growing difficulty of monitoring information flow in the cyber age.

China, meanwhile, has collected data drop by drop, it says.

As Congress begins work to halt the seepage - with the Senate adopting a package of tighter security measures last week and the House scheduled to follow suit this month - details emerging from the report highlight major areas of US vulnerability.

Weak counterintelligence

Chinese spying is difficult for US intelligence to track, partly because it involves a piecemeal strategy that contrasts sharply with the tightly centralized espionage of the former Soviet Union.

Beijing mines information from among its estimated 3,000 corporations and 100,000 students and graduates in the US, as well as tens of thousands of delegation members who visit America each year, the report says. By tasking ordinary Chinese visitors - and, as needed, "sleeper" agents long established in the United States - with small, specific duties, Beijing's spy organizations can hide behind multiple fronts.

For example, one "sleeper" agent named Bin Wu, a former Chinese philosophy professor, arrived in the US after the 1989 Tiananmen protests. He set up several small front companies in Norfolk, Va., to solicit technology for forwarding via Hong Kong to China's main intelligence body. In 1993, he was convicted for smuggling third-generation night-vision equipment to China.

"Because of the breadth of the PRC's [People's Republic of China] collection efforts, the US government cannot completely monitor PRC activities in the United States," says the report. The FBI and CIA face shortages of Chinese-language experts and other resources for countering China, it says.

Moreover, US intelligence lacks any broad program to block efforts by China's expanding US-based commercial network to acquire US military technologies.

Chinese firms have attempted to obtain such sensitive equipment by buying an interest in American high-tech companies or directly purchasing advanced US military surplus goods. In one operation, customs agents seized more than $36 million worth of surplus military navigation systems, encryption devices, and other top-secret items being illegally exported to China.

To smuggle such advanced US technology out of the country, China has exploited weaknesses in US customs, stowing contraband in diplomatic pouches and commercial aircraft, the report adds. In 1996, Hong Kong customs intercepted air-to-air missile parts being shipped by a Chinese company aboard Dragonair, a China-owned carrier.

Lapses at weapons labs

Perhaps the most glaring failure of counterintelligence against China, sources indicate, involves the US national weapons laboratories under the Department of Energy (DOE). They conduct research on the US nuclear arsenal.

"The counterintelligence program at the DOE does not even meet minimal standards," the new DOE counterintelligence director told the House committee.

National weapons laboratories are vulnerable to Chinese espionage because of the "totally inadequate" background investigations on foreign visitors and workers at the labs, he added.

Moreover, the labs have failed to keep close tabs on contacts between their scientists and foreign counterparts. In one case, lab scientists who wanted to skirt security met foreign colleagues at a Holiday Inn in Albuquerque, N.M.

Electronic information

High-performance computers at the weapons labs - the world's most powerful - are a prime target of China's spies for their computational strength and for the data they contain, the report says.

Hundreds of foreign nationals, including research students and

university staff who may be tied to overseas intelligence, have access to these computers. Yet no reliable system has existed to prevent people from putting classified information on unclassified computers. It's a lapse that allegedly allowed Wen Ho Lee, a Taiwan-born lab scientist suspected of spying for China, to transfer secret nuclear-weapons data to unclassified computers.

Another electronic threat is e-mail. More than 250,000 unmonitored e-mails are sent out of the Sandia National Laboratory in New Mexico each week.

Looser export controls

After the collapse of the Soviet Union and end of the cold war, countries such as China have taken advantage of the weakening of international export controls as well as the relaxation of US controls by the Clinton administration. Moreover, Beijing is benefiting from the more relaxed controls on the export of technology to Hong Kong, which reverted to Chinese sovereignty in 1997.

US firms - including satellite makers Hughes and Loral - have lobbied for export liberalization. They have also pushed the envelope of existing export-control laws to gain access to the China market, despite possible security risks, the report charges.

"Security was ninth on my list of priorities," one Loral manager at a Chinese launch site told a Defense Department monitor interviewed by the Cox committee.