The Spy Who Shagged Us

...In basketball terms, our team is not putting points on the board...

...Twenty years of hard work by thousands of decent, loyal Americans is now at risk and will have to be minutely reexamined, page-by-page, line-by-line...

...To take just one example, China's consulates in Los Angeles and San Francisco are both obvious targets for the FBI's FCI squad...

...It's hard to fault Director Mueller's response to this point...

...THE WASHINGTON POST, APRIL 16, 2003 D 66 6 OUBLE AGENT' ARRESTED," screamed the headline across an April 9 Department of Justice news release, announcing the arrest of a Chinese American consultant from Los Angeles, Katrina Leung, on charges of stealing secret FBI documents...

...Security for Chinese Cash, published by Regnery...

...Chagrined, Freeh returned to the committee months later, admitting that the roadmap had pointed to vital clues in the FBI's own files...

...When he learned of the problem, he went after it...

...In response, Pennsylvania senator Arlen Specter took to the Senate floor to question whether the FBI had deliberately withheld the information from the committee, or whether the bureau "was not competent enough to know what it had in its own files:' Why wasn't the FBI's investigation of Chinagate more vigorous or effective...

...At one point the head of Chinese military intelligence said, in essence, to a Chinagate figure: "We want President Clinton re-elected, and here is $200,000 in (illegal) campaign funds to make it happen:' It would be hard to find a more direct assault on the American Constitution than that...

...The fact that the indictment talks of her as a potential "double agent" seems to imply that she was already a Chinese agent or asset in 1983, or that at the very least the Chinese were then already actively trying to recruit her...

...Normally a field agent like Smith would have demanded supervision and backup just to protect his own career in case things went badly...

...Again, because of information sharing, materials originating in other parts of the U.S...

...Were these conversations real or stage-managed...

...The FBI has charged Leung with illegally copying classified materials from Smith's valise...

...Two years later, out of frustration at the failure of the American government to get to the bottom of Chinagate, Edward Timperlake and I wrote Year of the Rat: How Bill Clinton Compromised U.S...

...But Congress is pressing the bureau to reexamine the handling of these cases, and Leung's and Smith's indictments provide critics with an open door...

...If so, she may have saved Clinton's presidency and was worth every penny Beijing paid her...

...The fact that she was having sex with both of the top two FBI counterspies covering China on the West Coast at the same time is certainly suspicious and maybe not a coincidence...

...The companies we namedLockheed-Martin, Loral, Hughes, McDonnell-Douglas (now part of Boeing)—have paid multimillion dollar fines and made apologies...

...Flipping a foreign agent back on her own spy organization is a lot more serious than dealing with a Chinese lady with some Beijing gossip on offer...

...Lee, a Taiwan-born scientist who pleaded guilty in 1997 to delivering nuclear secrets to the PRC, is one of a number a number of recent high-profile military technology smuggling cases involving China...

...The logical person for this job would be California Republican Congressman Christopher Cox...

...Leung had been on the U.S...

...Department of Justice attorneys...

...She and Smith were both in the Los Angeles area, so getting together would not have been a problem...

...She came to the United States for college—Cornell and the University of Chicago...

...In December 2000, Los Alamos scientist Dr...

...Likewise, Cleveland was a supervisor in the bureau's San Francisco field office and would have had the same access and same duty...

...Disinformation originating in the Chinese consulates in Los Angeles or San Francisco could end up infecting assumptions and analysis about the Chinese Communist Party's capabilities and intentions around the world...

...Meanwhile Katrina Leung, then simply a prominent Chinese American businesswoman in Los Angeles, was publicly defending another key figure, Ted Sioeng, who with his family had given $400,000 in illegal campaign funds to Clinton-Gore in 1996...

...T hough she has been on the U.S...

...The Mandarin version of her maiden name is Zhen Wenying...

...apparently he did not...

...Representative Cox has already produced a unanimous and bipartisan report on illegal Chinese tech transfer, and that is no mean feat...

...Considering the pillorying the FBI took over Wen Ho Lee, there is no doubt little stomach for reopening any of these cases...

...Then there is information flowing in the other direction: what Leung may have fed to the People's Republic...

...Wen Ho Lee pled guilty to one count of mishandling classified materials, then wrote a book claiming he was victimized because he is a Chinese American...

...Certainly being flirtatious was part of Leung's Method of Operation...

...April's indictments force every American security agency with a hand in the China game—CIA, the Defense Intelligence Agency, the service intelligence agencies, the State Department, even Capitol Hill—to begin its own damage assessment...

...As a practical matter, the damage-control task forces in various agencies of the American intelligence community and its sister services abroad will have to examine carefully everything they have reported on China to determine its origin...

...A CNN story claims she informed her 54 THE AMERICAN SPECTATOR • JUNE/JULY 2003 Chinese handlers that the National Security Agency had bugged China's version of Air Force One...

...The U.S...

...The only good news: unlike the Ames and Hanssen cases, there is no indication—so far—of American agents in China being captured or executed as a result of the Leung case...

...But since the chief allegation against Leung is that she illegally passed U.S...

...Smith and Cleveland were by reputation friendly, approachable agents...

...It was Sioeng who sat next to Al Gore at the notorious Buddhist temple fundraiser...

...her Chinese handlers at the MSS gave her a cover name, "Luo Zhongshan," for the birthplace near Canton of Dr...

...According to court documents, the FBI bugged the Leung home, to be able to overhear what was said at the parties and gatherings...

...The Los Angeles Times has already reported that Leung revealed the FBI's electronic penetration of China's Los Angeles consulate...

...More tellingly still, a separate FBI inspection team began a crash review of all China-related counterintelligence cases...

...Every American agent, including other FBI special agents, and every source known to Smith and Cleveland has to be assumed to have been compromised, and their covers blown...

...Everything is suspect...

...I f the FBI allegations and indictments are sustained, the intelligence losses are on a par with the CINs Aldrich Ames and the FBI's Robert Hanssen cases...

...intelligence community...

...Normally, someone with the right security clearances and "Need to Know" goes to the SCIF and reads what he or she needs...

...But while the wheels of justice turn, the intelligence world does not stand idly by...

...52 THE AMERICAN SPECTATOR • JUNE/JULY 2003 Republic of China...

...In sworn testimony made public in April, the SCIF clerk of the FBI's Los Angeles Field Office has testified that alone of all of the resident agents, only Smith checked out classified documents overnight...

...Having your own double agent triple on you is a very high risk, either because the double wasn't genuine in the first place—was planted, in JUNE/JULY 2003 • THE AMERICAN SPECTATOR 53 other words—or because she could at any point be discovered by her original employers and given a stark choice: continue the game, only now as a triple, or face execution as a foreign spy...

...Still, we have the FBI investigating itself...

...If the FBI had bugged a consulate copier, or even a shredder, "garbage" could be fed through those machines to confound the FBI's Washington analysts...

...Who Is Katrina Leung...

...For at least twelve years, Smith and Cleveland (the latter is under investigation, but not indicted) had known that Leung was passing information back to China's Ministry of State Security (MSS)—Beijing's version of the KGB...

...counterintelligence...

...We were less successful, however, in tracing the American government's failure to investigate the broader issue of Chinese attempts to penetrate the U.S...

...JUNE/JULY 2003 • THE AMERICAN SPECTATOR 55...

...both visited FBI Washington Headquarters on a regular basis...

...Even as she was doing that, Leung had sexual affairs going not just with Smith but also with the other top FBI counterintelligence agents on the West Coast, including Special Agent William Cleveland, Jr., who went on to become head of security for Lawrence Livermore Labs—repository of many of America's deepest nuclear secrets...

...Nor does it stop at the water's edge...

...In particular, she was supposed to provide the FBI with information gathered from her contacts with the MSS, based on the FBI's belief that Leung would pretend to be an asset for the MSS, while in truth, she would be a double agent for the FBI...

...A Chinese Triple-Cross...

...BY WILLIAM C. TRIPLETT Every major Chinese counterintelligence case over the past twenyyears is potentially compromised, including those involving espionage, technology theft, and alleged efforts by the Chinese Government to influence the 1996 presidential elections...

...Another line of inquiry for the investigators...

...So, did Leung steer her ostensible FBI handlers away from the most important Chinagate figure, Ted Sioeng, and toward a lesser figure—Chung—who just basically got in over his head...

...The FBI damage-control team will want to know if she confined her sexual affairs to the two counterintelligence agents, or if she had other intimate friends at the bureau or beyond...

...For U.S...

...Now forty-nine and married to a physician or biologist with whom she has a son, she is a naturalized U.S...

...Sun Yat-tsen, the founder of the Republic of China...

...The timing of the two announcements was no coincidence...

...citizen...

...What was left was the bureau's puzzling performance, orlack of it...

...Afundamental question for the FBI investigation team is: is she just a crook playing the Americans and the Communist Chinese off against each other for money, or is she a trained MSS asset carefully inserted to sabotage the FBI's counterintelligence operations...

...Likewise, how much of what she told the FBI directly was true and how much was more disinformation...

...In the summer of 1997, Utah senator Robert Bennett, a member of the Thompson Committee, gave FBI Director Louis Freeh a "roadmap"—a line of inquiry to pursue...

...And it's important to note that the FBI's Los Angeles SCIF would typically have thousands of documents relating to ongoing investigations, including drug cases, local corruption, and any sort of federal crime—not just Chinese counterintelligence...

...According to Los Angeles Chinatown sources, she even tried it with Chinese Communist Party boss Jiang Zemin when he visited Los Angeles in 1997...

...The same day, FBI Director Robert Mueller announced the arrest of FBI Special Agent James J. Smith for having"betrayed the American people he was sworn to protect...

...Defense contractors...

...And, frankly, the bureau's overall track record in handling Chinese counterintelligence cases is not good...

...An open question at this point...

...One aspect of this was simply refusing all calls for an independent prosecutor...

...An indication of where this issue is headed can be found buried in paragraph six of former Special Agent Smith's indictment: From in or about August 1983 and continuing through about December 2002, Katrina Leung was an FBI asset and was tasked with providing the FBI with information relating to the PRC...

...The implications of the Leung/Smith case are so broad and deep that it requires an outside check...

...And then there's the matter of former agent Cleveland who retired from the FBI in the early 1990s and went to work as Lawrence Livermore's head of security...

...Putting Points on the Board T o anyone who has ever been in the American intelligence community, this case is certainly baffling...

...The rest was accomplished by circumventing experienced DOJ prosecutors in Los Angeles who wanted to vigorously pursue the cases were shut down—by refusing or delaying requests for warrants and-wiretaps, and by establishing what amounted to a witness-protection service for Chinagate figures—to avoid their being forced to tell all they knew...

...A "fact" may have started in an FBI California field office, passed through FBI Headquarters, and gone on to a second or even a third American service before it was passed to London...

...Year of the Rat Revisited / n the Chinese calendar, 1996 was the "Year of the Rat:' It was also the time of a concerted effort by Chinese intelligence to penetrate the American government at the highest levels...

...Knowing what level of electronic penetration the FBI had achieved would allow MSS the option of removing the bugs or feeding them disinformation...

...What we do know is this: most of the Chinagate characters were Los Angeles-based...

...payroll for twenty years, collecting almost $2 million total to spy on the People's William C. Triplett II is a Washington defense writer and coauthor with Edward Timperlake of Year of the Rat: How Bill Clinton Compromised U.S...

...More diabolically still, some of the bugs your agent warned you about could be "discovered" and destroyed, leaving the rest in operation so the FBI would have confidence in them...

...government...

...Certainly the case was vitally important...

...They've lost everything—all the espionage cases, all the military technology cases, and the Chinese penetration of the American government at the highest levels...

...The FBI's own filings reveal that she may have passed to Beijing photographs of FBI and possibly CIA agents...

...In the end, Chung was financially ruined, and Sioeng has disappeared, untouched...

...It's time for Cox Committee II...

...What follows is a first cut at assessing the fallout for U.S...

...But Leung may also have been an already signed-up MSS agent, caught or compromised by U.S...

...Most of the figures who graced our pages—Maria Hsia, John Huang, Charlie Trie, Ernie Green, Ted Sioeng, et al.—either fled the country or were convicted of federal crimes...

...Similarly, the damage control teams will have to assume that every document Smith and Cleveland saw, every oral report they heard, every case they worked on (or knew about) has been transferred to Chinese intelligence...

...Put another way: how much of what Leung told the FBI of her biography is true, and how much is contrived "legend...

...secrets to China, that would make her a "triple agent," sometimes known as a "triple-cross...

...To our satisfaction, we proved the case...

...Key U.S...

...Security for Chinese Cash, from Regnery Publishing...

...But Cleveland was in San Francisco...

...Smith's actions should have been a red flag, but for some reason they were not...

...Because American intelligence agencies share information, such disinformation, like a computer virus, taints everything it touches...

...And both Smith and Leung's names lead back to the web of espionage, influence peddling, political fundraising and cover-ups known as Chinagate...

...According to press accounts, former agent Cleveland was involved in both investigations of both cases, the Peter Lee case in particular, which ended with only minor punishment...

...screenwriter's fantasy of corruption and intrigue come true...

...government offices at home and abroad are equipped with something called an "SCIF"—Secure Cornpartmented Information Facility, in plain English, a place where highly classified documents are stored...

...Some of this information went to the MSS, it reports...

...A young Chinese woman in 1983 could have valuable MSS "contacts" for only one of two reasons: either she has a close relative in the MSS, or she was an MSS agent herself...

...He has the experience and the integrity for the job...

...And just as surely, FBI headquarters in Washington will be on the receiving end of some difficult questions about how it treats materials it receives from others...

...Agent Smith was a major participant and the handler for one of the case's key figures, Johnny Chung, who insists to this day that he was set up...

...In court documents, the FBI emphasized that Smith had been a supervisor and therefore "would have had access to and a duty to review cases being worked by the Foreign Counter Intelligence (FCI) China squad...

...Until we know otherwise, every report Leung gave her handlers has to be considered "disinformation...

...intelligence community or with sister services abroad undoubtedly made their way to the FBI's Los Angeles SCIF, either directly or as part of another document...

...We did account for the obstruction of justice in Washington: Janet Reno had made a Faustian bargain with President Clinton, in terms of which she would remain attorney general for another four years in return for keeping the Chinagate investigation under control...

...intelligence community routinely shares information with friendly services abroad...

...The tale that spills out from the accompanying indictments and sworn testimony is a cynical L.A...

...Having Leung in the MSS orbit from the beginning raises additional questions...

...Her family is said originally to have been from Fujian Province, opposite Taiwan, but she was born in Guangzhou (the former Canton) and raised in Hong Kong...

...The FBI's Los Angeles Field Office led the investigation...

...How the FBI could allow someone with Chinese intelligence associations to triple back on them for perhaps twenty years is inexplicable, as is the total lack of serious supervision for this case...

...Occasionally an FBI agent will check something out of the SCIF to read at his desk and return it later in the day...

...His idea or hers...

...Mueller rightly wasted no time announcing a thirty-person DOJ task force to investigate the case...

...Espionage 0 f the three potential disasters—pure espionage, military secrets, and Chinagate—stemming from Leung's and Smith's arrest, the first is undoubtedly the bureau's top priority...

...None of the three named figures have been convicted of anything...

...payroll for two decades, no one in Washington has any high degree of confidence in her declared background...

...One of them would have to travel four hundred miles to keep their affair going...

...By the time the dust settled, Hughes probably lost half a billion dollars from its China satellite adventure...

...The information they would have access to—from official duties to lunchtime gossip—would have been of intense interest to Chinese intelligence...

...counterintelligence agents handling a case like this, it is called a "high-wire act," denoting the danger involved...

...Possibly she was a "walk-in:' volunteering her services to the United States...

...In that case, what the FBI was doing is called "flipping": instead of throwing her in jail, they would turn her back on the Chinese—a classic double agent...

...interests from the accusations so far—not to mention possible further revelations that may follow in their wake...

...contradictory information could be used to throw the Americans off some potentially fruitful trail...

...How Bad Is It...

...Ominously, a search of her residence turned up FBI documents relating to the Peter Lee espionage case and others relating to Chinese fugitives...