China dismantled large CIA spy network in 2010, say sources

CIAA few years ago, China busted an extensive network of secret operatives run by the United States Central Intelligence Agency. The CIA has yet to recover from the massive blow to its operations, say sources. The CIA has devoted substantial resources to gathering intelligence in China in recent years, and has painstakingly built a network of spies. The latter are Chinese nationals recruited by CIA officers to spy on Beijing on behalf of the United States. But, according to The New York Times, in early 2010 the CIA’s assets began to disappear one by one. By 2012, the Agency’s network of secret operatives in China had been all but wiped out.

According to the Times report, published on Saturday, the CIA lost as many as 20 agents on the ground in China, who were either executed or imprisoned by the authorities in Beijing. The paper cites “ten current and former American officials”, who claim that many of the agents had operated for years deep inside the Chinese state apparatus prior to their capture. At least one of them, say sources, was executed “in front of his colleagues in the courtyard of a government building” in an attempt to dissuade other government employees from spying on the Chinese state. At least 12 of the CIA’s assets in the country were executed between 2010 and 2012, according to The Times.

The damage to the CIA has been incalculable, according to sources, and the Agency is still recovering from the loss of an extensive network of operatives that took years to assemble. Sources described the loss of the network to the Times as “one of the worst in decades” and compared it to the loss of assets caused in the 1980s and 1990s by two notorious American spies for the Soviet Union and Russia, CIA officer Aldrich Ames and Federal Bureau of Investigation agent Robert Hanssen. At that time, dozens of agents and over 100 intelligence projects were compromised.

According to the report, the FBI and the CIA set up Project HONEY BADGER, a joint counterintelligence investigation into the China breach. But the results of the investigation reportedly remain inconclusive. Some argue that such a major dismantling of a network of assets could only have originated from a mole inside the US Intelligence Community. Others believe that the arrests of CIA agents resulted from a sophisticated Chinese computer hacking operation that targeted the CIA. A third theory posits that the breach was caused by the infiltration of the intelligence community of Taiwan, an important American ally in Southeast Asia.

Since 2012, the CIA has been trying to rebuild its network in China, but it will take it years to reach the level of sophistication in had achieved in 2010. The New York Times said it reached out to the CIA and FBI for comment but received no responses.

Author: Joseph Fitsanakis | Date: 22 May 2017 | Permalink

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Canada suspected Soviets of stealing prime minister’s private diary

William Lyon Mackenzie KingCanadian officials speculated that Soviet spies stole a missing volume from the private diary collection of William Lyon Mackenzie King, Canada’s longest-serving prime minister, who led the country in the run-up to the Cold War. A liberal anticommunist, Mackenzie King was Canada’s prime minister from 1925 to 1948, with a break from 1930 to 1935. He is known for having led the establishment of Canada’s welfare state along Western European standards.

When King died in 1950, he left behind instructions asking for his private diaries to be destroyed. However, the executioners of his will decided instead to turn over King’s private papers —including his diaries— to the Canadian state. In 1975, the Library and Archives of Canada began releasing King’s private diaries to the public. The diaries contain daily entries that span over half a century, up until King’s death. One crucial volume, however, is missing. It covers the last two months of 1945, when Canada was engaged in intensive deliberations with the Allies about the shape of postwar Europe and Asia. These deliberations also involved frank discussions between King and his British and American counterparts about the atom bomb, and possibly measures to uncover suspected infiltration of Western government institutions by communist sympathizers.

Now a new book, written by Trent University history professor Christopher Dummitt, reveals
that Soviet spies were suspected of stealing the missing volume. The book, Unbuttoned: A History of Mackenzie King’s Secret Life, claims that the Canadian Security Intelligence Service (CSIS) was notified of the missing diary volume in 1969. Shortly afterwards, the CSIS launched an investigation into the missing memoir. In 1985, says Dr. Dummitt, a CSIS memo speculated that an agent of the Soviet KGB might have stolen the diary, because it contained information that was of interest to Moscow. Interestingly, however, the previous diary volume, which covers the case of Igor Gouzenko, is not missing. Gouzenko was a cipher clerk at the Soviet embassy in Ottawa, whose 1945 defection to Canada is sometimes credited with starting the Cold War. Why would a Soviet spy not steal that volume as well, the skeptics ask?

Professor Dummitt entertains a simpler idea in his book, which is that Jean-Louis Daviault, an employee of the Library and Archives of Canada, may have stolen the volume. Daviault, who had been tasked with photographing King’s diary collection, was caught trying to sell parts of the diary to a Canadian newspaper. It was probably he who stole the missing volume, in order to sell it to the press, or a rival intelligence agency, argues Dr. Dummitt.

Author: Joseph Fitsanakis | Date: 17 May 2017 | Permalink

New book reveals how MI5 infiltrated the British communist party

Maxwell KnightA new biography of famed British Security Service spymaster Maxwell Knight reveals that a number of prominent British communists were secret government agents in the 1930s. After serving in the British Royal Navy during World War I, Knight was recruited by the Security Service, Britain’s domestic intelligence agency, which is commonly known as MI5. He eventually rose to lead the agency’s Section B5(b), which was responsible for using agents to infiltrate political groups deemed radical by the authorities. During the interwar years, under Knight’s leadership, Section B5(b) focused largely on British fascist organizations, but also infiltrated the Communist Party of Great Britain. Knight, who died in 1968, left an indelible mark on the character and operations of MI5. He also served as a model for the character of ‘M’, the fictional director of the British Secret Intelligence Service (MI6) in the novels of Ian Fleming, creator of James Bond.

Now Preface Publishing has issued a new biography of Knight, authored by British author Henry Hemming. The book, entitled M: Maxwell Knight, MI5’s Greatest Spymaster, is largely based on the diaries of Knight. It reveals the identities of a number of MI5 agents that worked for the late spymaster in Section B5(b). They included British intellectuals, artists, activists and at least one barrister, Vivian Hancock-Nunn. A leftwing legal counsel, Hancock-Nunn provided pro-bono legal services to the publications of the Communist Party of Great Britain. However, is is now believed that he was agent M/7, run by Knight’s Section B5(b). Another agent, codenamed M/1 by Knight, was Graham Pollard, son of a highly respected British historian, who broke ranks with his wealthy family to join the Communist Party in the 1920s. By 1933, Pollard was a prominent and influential member of the Party, and regularly penned fiery articles in the Daily Worker, the Party’s newspaper. Hemming’s book, however, reveals that Pollard was an agent of MI5, who went as far as marrying a prominent communist activist in order to build his cover.

Hemming notes that some of the most prolific agents run by Knight were women. Three of them, Kathleen Tesch, Olga Grey and Mona Maund, infiltrated various levels of the Communist Party, which was known for its relatively inclusive treatment of women at the time. Knight relied on them for regular reports about the Party’s activity, despite the objections of his superiors, who believed that women should have no place in intelligence operations. The book’s author also notes that he was not able to confirm the identities of these agents in MI5 archives, because they remain classified. However, he told British newspaper The Guardian that he was “99.9 percent certain” of the accuracy of his information.

Author: Joseph Fitsanakis | Date: 12 May 2017 | Permalink

FBI acting head says he will report attempts to stop Russia probe

Andrew McCabeThe interim director of the Federal Bureau of Investigation has told an intelligence panel in the United States Senate that he will not hesitate to report any attempts by the White House to interfere with an official investigation into Russia’s role in the 2016 presidential election. Andrew McCabe assumed the leadership of the FBI on Tuesday, after US President Donald Trump abruptly fired the Bureau’s director, James Comey. A trained lawyer who joined the FBI in 1996, McCabe amassed significant experience in countering organized crime and terrorism before being appointed Deputy Director of the Bureau in 2016.

It is worth noting that Republican Party officials have criticized McCabe for being close to former Democratic Party presidential candidate Hillary Clinton. McCabe’s wife, Dr. Jill McCabe, campaigned for a seat in the Virginia State Senate in 2015, on a Democratic Party ticket.

McCabe spoke on Thursday before the US Senate’s Select Committee on Intelligence, along with the directors of five other American intelligence agencies, including the Central Intelligence Agency and the National Security Agency. During their testimony, the six intelligence officials repeated their agencies’ previously stated claims that Moscow engaged in systematic efforts to assist the election of Donald Trump in last November’s presidential elections. McCabe also responded to specific questions by Democratic senators about alleged attempts by the White House to prevent probes in to Russia’s alleged intervention.

When asked by Democratic Senator Mark Warner whether he would inform the Senate’s Select Committee on Intelligence of attempts by the Trump administration to stop the probe, McCabe responded saying: “I absolutely do”. There are currently at least three parallel investigations into Russia’s alleged involvement in the US presidential elections, of which the Senate’s is one. The US House of Representatives and the Department of Justice are also conducting separate investigations.

Author: Joseph Fitsanakis | Date: 12 May 2017 | Permalink

Israeli spy agencies’ budget has doubled in ten years

Yossi CohenThe combined budget of the two primary intelligence agencies of Israel, the Mossad and the Shin Bet, has doubled in the past decade, according to a report issued by the Israeli Ministry of Finance. Shin Bet is Israel’s domestic intelligence service, and is primarily responsible for counterterrorism and counterintelligence. The Mossad is Israel’s primary intelligence service, which means that it collects intelligence from foreign targets. The secretive agency also conducts covert and clandestine operations when authorized to do so by Israel’s government. The two agencies tend to work together with varying degrees of succces, but have distinct budgets.

Last week saw a rare instance of the release of a government report on the finances of these two agencies, which tend to shy away from discussing details about their financial scope. The information was included in a larger report about the Israeli government budget for 2018. The Finance Ministry report said that the 2018 budget for the Shin Bet and the Mossad will reach 8.6 billion shekels in the coming year. That amounts to approximately $2.5 billion. The ministry report noted that the budget for the two spy agencies has increased by just under 10 percent since last year. The same budget for 2017 was 7.8 billion shekels. That represented an increase of 300 million shekels from the 2016 budget.

Observers noted, however, that, although seemingly incremental, Israel’s spy budget for the Shin Bet and the Mossad appears to have doubled in just a decade. In 2006, under the leadership of Israeli Prime Minister Ehud Olmert, the combined Shin Bet/Mossad annual budget was below 4.5 billion shekels. By 2009, when Olmert was succeeded by Benjamin Netanyahu, the budget for the Shin Bet and the Mossad had reached 5.3 billion shekels. But Netanyahu, who promotes his image as a big believer in the capabilities of the Israeli intelligence community, presided over large budgetary increases for the Shin Bet and the Mossad alike. During his presidency, the Israeli intelligence community has seen near-unprecedented rates of growth in both its size and wealth.

Author: Joseph Fitsanakis | Date: 08 May 2017 | Permalink

Germany arrests Swiss spy who was monitoring tax-fraud investigators

Frankfurt AirportAuthorities in Germany have announced the arrest of a Swiss national who was allegedly spying on the activities of German tax-fraud investigators in Frankfurt. According to prosecutors in the German state of Hesse, of which Frankfurt is the largest city, the Swiss man was arrested on Friday and is currently in custody. He has been identified only as Daniel M., and is believed to be in his mid-50s. According to news reports, German counterintelligence officers had been monitoring the suspect for over a year. They were issued a warrant for his arrest in December of last year, but waited until he was on German soil to arrest him. He was arrested at Frankfurt Airport.

German federal prosecutors said simply that Daniel M. was employed in the financial and banking sectors of Germany until early 2012. However after that time, he is believed to have been employed by “the intelligence service of a foreign power”. German officials refused to identify the “foreign power”. However, the Berlin-based German newspaper Die Welt said on Sunday that the Swiss man arrested on Friday is an employee of the Swiss Federal Intelligence Service. The agency, known by its German-language initials, NDB, is Switzerland’s main intelligence agency, tasked with safeguarding the security of the small alpine nation by collecting and analyzing information.

The question is, what was a Swiss spy doing in Germany, and why was he arrested? According to Die Welt, Daniel M. was monitoring the activities of German tax-fraud investigators who have been trying for years to stop German citizens from having secret bank accounts abroad. The German government believes that billions of euros are deposited by its citizens in banking institutions in European tax-havens like Liechtenstein, Switzerland or Monaco. For the past decade, German authorities have resorted to bribing whistleblowers in offshore banks in order to acquire internal documents that reveal the identities of German citizens who are hiding their money in foreign bank accounts. It is estimated that over a hundred million dollars have been paid to whistleblowers by German authorities since 2006. The latter argue that the proceeds collected from unpaid taxes and fines more than justify the payments made out to whistleblowers. But the Swiss government has strongly criticized Berlin for encouraging Swiss banking sector employees to steal internal corporate information that often breaks Switzerland’s stringent privacy laws.

It is believed that Daniel M. was arrested while monitoring efforts by German tax-fraud investigators to approach potential whistleblowers working in the Swiss banking sector. Soon after the Swiss man’s arrest, officers from Germany’s Federal Criminal Police Office (BKA) searched a hotel room, several apartments and a number of business premises in Frankfurt and nearby cities. It is worth noting that Frankfurt is a major global financial center, which also hosts the headquarters of the European Central Bank. If found guilty, Daniel M. could face up to 10 years in prison for espionage.

Author: Joseph Fitsanakis | Date: 01 May 2017 | Permalink

French spy agencies conclude Assad government was behind Syria gas attack

Khan SheikhunA comprehensive report released yesterday by the French Intelligence Community concludes with certainty that the government of Syrian President Bashar al-Assad was behind the April 4 sarin gas attack in northwestern Syria. The report, a “national evaluation” based on France’s own intelligence sources and scientific analysis of samples collected from the site of the attack, indicates that the poison gas used in the attack came from stockpiles that belong to the Syrian government.

The sarin gas attack targeted Khan Sheikhun, a town of approximately 50,000 people in the southern region of Syria’s Idlib Governorate. The city is located on the main highway that connects the Syrian capital Damascus with the city of Aleppo in the north of the country. The surprise attack killed nearly 100 people and drew near-universal condemnation from the international community. It also sparked a military attack by the United States, which launched a missile attack at a Syrian military base from where the sarin gas attack allegedly originated.

On Wednesday, France’s Minister of Foreign Affairs, Jean-Marc Ayrault, announced the publication of a report, which, he said, proves conclusively that the Syrian government perpetrated the attack. The six-page declassified version of the report concludes that “the Syrian armed forces and security services perpetrated a chemical attack using sarin against civilians”. It alleges that the conclusion rests on “intelligence collected by our services”, which includes “samples from the scene of the attack”. The latter are reportedly identical with samples collected from sites of previous chemical attacks perpetrated by the Syrian government. Additionally, the French report concludes that the attack was conducted with the use of airplanes, which the Syrian rebel forces do not have.

The French intelligence report comes after a similar report from the United States concluded that Assad’s government was behind the attack on Khan Sheikhun. A few days after the attack, medical tests conducted on victims of the attack by Turkish experts showed that sarin gas had been used, but did not implicate a specific culprit. The Syrian and Russian governments deny all involvement in the attack and claim that it was carried out by al-Qaeda-linked rebels.

Author: Joseph Fitsanakis | Date: 27 April 2017 | Permalink