FBI files espionage charges against California man who allegedly spied for China

Xuehua Edward PengThe United States has pressed espionage charges against a naturalized American citizen who operated as a courier for Chinese intelligence while working as a tour operator in California. On Monday federal prosecutors in San Francisco filed espionage charges against Xuehua “Edward” Peng, a 56-year-old Chinese-born American citizen. Peng, a trained mechanical engineer, reportedly entered the United States in June 2001 on a temporary visa. In 2012 he became a naturalized American citizen. By that time he was working for US Tour and Travel, an independent tour operator in California.

On Friday, officers with the Federal Bureau of Investigation arrested Peng at his home in Hayward, California, and charged him with spying on behalf of the Ministry of State Security (MSS), which is China’s primary external intelligence agency. At a press conference held on Monday, David Anderson, US Attorney for the Northern District of California, said that Peng began working for the MSS in June 2015 and continued to do so until June of 2018. Throughout that time, Peng participated in at least six dead drops on behalf of the MSS, said the FBI. But he was unaware that the agent on the other end of the dead drop was in fact an FBI informant, who had lured Peng and the MSS into an elaborate sting operation. The informant is referred to in the indictment as “the source”. The FBI said it paid the informant nearly $200,000 to facilitate the sting operation.

Most of the dead drops took place at a hotel in Newark, California. Peng would book a room in the hotel using a popular online booking service. He would check in and go to his hotel room, where he would hide envelopes containing as much as $20,000 in cash. He would then leave the room key at the front desk for his contact to pick up. The contact (the FBI informant) would pick up the key and the cash, and leave memory sticks with classified US government information for Peng to pick up. Peng would then travel to China to deliver the classified information to the MSS.

Unbeknownst to Peng, the FBI was monitoring him all along, and managed to secretly tape his alleged espionage activities. The surveillance footage is now part of the federal affidavit that was unsealed on Monday. Moreover, the FBI appears to have given Peng classified information that was approved for the purposes of the counterespionage operation against him. It is not known whether the classified information was real, deceptive, or a mixture of the two. It is worth noting that Peng is not a foreign diplomat and is therefore not subject to the rules of diplomatic immunity. He now faces a maximum of 10 years in prison and a fine of up to $250,000 if convicted.

Author: Joseph Fitsanakis | Date: 01 October 2019 | Permalink

Senior anti-corruption official to lead China’s main spy organization

Chen WenqingA senior Chinese official with a leading role in the country’s ongoing anti-corruption crusade has been appointed head of the nation’s spy agency, which has undergone extensive purges in recent years. Chen Wenqing, 56, will be replacing Geng Huichang as Minister of State Security. Geng, 65, will be retiring after nearly a decade at the helm of China’s intelligence and security agency, which is responsible for intelligence collection, counterintelligence and political security. Chen’s appointment was approved on Monday by the Standing Committee of the National People’s Congress. It comes a year after he was appointed as the senior Communist Party representative at the Ministry of State Security.

Chen, a native of China’s southwestern Sichuan province, joined the police force at a young age and rose through the ranks to become the local director of the Ministry of State Security’s local field office. After eight years in that post, he was appointed provincial director of the Central Commission for Discipline Inspection (CCDI), the Communist Party’s agency responsible for combating corruption among Party apparatchiks. In 2012, Chen became the youngest-ever deputy director of the CCDI, working under the commission’s chairman, Wang Qishan. From that post, Chen helped lead a massive anti-corruption campaign that resulted in the purging of over 100 senior Communist Party officials on charges of dishonesty and sleaze. Those purged included several senior officials at Ministry of State Security. Among them was Zhou Yongkang, Secretary of China’s Central Political and Legal Affairs Commission, which oversees the country’s security, intelligence and law enforcement institutions. The crackdown also targeted the deputy director of the Ministry of State Security, Ma Jian, and its once-powerful Beijing director, Liang Ke.

In recent years, several officials from the CCDI, who are seen by many as uncorrupted and incorruptible, have filled the positions of former Ministry of State Security bureaucrats who were fired during the government’s anti-corruption campaign. Chens’ appointment makes him the third senior CCDI official to be appointed to a senior post in the Ministry of State Security. Some experts believe that Chen’s move affirms the growing power of the CCDI, which has been the main implementation vehicle of President Xi Jinping’s ongoing anticorruption campaign that has gripped China since his rise to power in 2012.

Author: Joseph Fitsanakis | Date: 08 November 2016 | Permalink

China and Taiwan swap jailed spies in historic first

Ma Ying-jeou and Xi JinpingChina and Taiwan reportedly swapped each other’s imprisoned spies, just days before a historic meeting between their heads of government. It was the first time in the two nations’ history that they have swapped jailed spies with each other. The exchange appears to have taken place in secret in late October, less than two weeks ahead of a historic November 7 meeting between Chinese President Xi Jinping and Taiwanese President Ma Ying-jeou. The meeting, which took place in Singapore, was hailed for its historic significance, as it was the first of its kind since 1949, when the two countries emerged following a bitter civil war between communist and nationalist forces.

News of the spy exchange emerged in the Taiwanese press on Monday, when it was reported that Taipei had released Li Zhihao. Li, a mysterious Chinese intelligence officer known in spy circles as “the man in black”, had been arrested in 1999 after being lured into Taiwan, and was serving a life sentence. He is believed to be 70 years old. In return, Beijing appears to have freed Chu Kung-hsun and Hsu Chang-kuo, two colonels in Taiwan’s Military Information Bureau, who were arrested by mainland China’s counterintelligence nearly a decade ago. At the time of their arrest, the Taiwanese government protested that the two officers had been kidnapped from the Vietnamese side of the Chinese-Vietnamese border. But Beijing had dismissed Taipei’s protestations and had convicted the two men of espionage.

It is worth pointing out that the two Taiwanese officials had initially been sentenced to death, but their sentences were later commuted to 20 years behind bars. It is believed that they were the last Taiwanese military officials held in China for espionage, and that they were the highest-ranked Taiwanese spies imprisoned in China. Their release, therefore, marks an unprecedented development in Chinese-Taiwanese relations, though it should be remembered that dozens of Taiwanese civilians are held in Chinese jails on espionage charges.

Author: Joseph Fitsanakis | Date: 01 December 2015 | Permalink

US warns China against use of non-official-cover operatives

Chinese Ministry of State SecurityThe White House has warned the Chinese government to stop deploying on American soil intelligence operatives masquerading as tourists, business executives or other false covers. Nowadays the standard practice for intelligence personnel deployed abroad is to be posted as diplomatic staff in a foreign embassy or consulate. But there are some intelligence officers who do not follow that practice. These are known as non-official-cover operatives, or NOCs in American intelligence parlance. NOCs are typically high-level principal agents or officers of an intelligence agency, who operate without official connection to the diplomatic authorities of the country that is employing them. They typically pose as business executives, students, academics, journalists, or non-profit agency workers. Unlike official-cover officers, who are protected by diplomatic immunity, NOCs have no such protection. If arrested by authorities of their host country, they can be tried and convicted for operating as unregistered agents of a foreign government.

According to The New York Times, a significant number of Chinese NOCs have recently entered the United States as part of the Chinese government’s Operation FOX HUNT. Supervised by China’s Ministry of State Security (MSS), FOX HUNT is aimed at the thousands of former officials and other fugitives from China, who are alleged to have embezzled funds and are now living abroad, usually in considerable wealth. As part of the MSS operation, teams of intelligence agents are said to have been dispatched around the world in order to hunt down these fugitives, many of whom are believed to have embezzled hundreds of millions of dollars in government funds. Chinese media reports claim that nearly 1000 such fugitives have been “repatriated”, either voluntarily or involuntarily, since the launch of FOX HUNT. The tactics used by the Chinese NOCs are not clear, and some suspect that they include direct or indirect threats against the fugitives’ family members in China. Chinese reports have described FOX HUNT operatives as “mostly young, highly skilled”, and accustomed to “rapid-fire deployment” around the world.

The Times said that Washington views the parts of Operation FOX HUNT that take place on US soil as “a departure from the routine practice of secret government intelligence gathering” that both America and China practice against each other. The US, therefore, does not want Chinese officers without official diplomatic credentials, but posing instead as students, tourists or business representatives, engaging in intelligence operations on US soil, said the paper. It added that Washington’s warning had been delivered to Beijing “in recent weeks”. The Times article did not include specific descriptions of FOX RUN activities on American soil.

Author: Joseph Fitsanakis | Date: 17 August 2015 | Permalink

UK report warns about sexual entrapment by foreign spies

UK Ministry of DefenceBy IAN ALLEN | intelNews.org
A leaked report issued by military authorities in the United Kingdom cautions British officials to be aware of attempts by Chinese and Russian intelligence services to compromise them using sexual entrapment. The London-based Sunday Times newspaper said it had acquired a copy of the document, entitled Manual of Security, authored by the United Kingdom’s Ministry of Defence for use by senior officials. The manual warns that foreign intelligence services are known to employ sexual entrapment or romantic attachment as a means of compromising their targets. The document singles out the Russian Federal Security Service (FSB) and the Chinese Ministry of State Security as two adversary agencies that are known to employ sexual entrapment on a regular basis. British officials are warned in the document that the FSB could gain classified information by exploiting “knowledge of marital infidelity or sexual activity the target may wish to hide”. The Times spoke to an unidentified “senior military official”, who told the paper he was recently approached by “a very attractive blonde woman in her early 30s” in a hotel in the Russian city of Saint Petersburg. The woman began telling him of her fascination with vintage British sports cars, which happened to be the British official’s favorite hobby. He eventually terminated the encounter after he became suspicious of the woman’s motives. But he remains puzzled as to how the woman knew details of his personal hobbies. In 2009, the British Foreign Office had to recall its deputy consul-general in the Russian city of Ekaterinberg, after he appeared in an explicit video on YouTube having a sexual encounter with two Russian prostitutes. Many speculated at the time that the video had been posted online by the FSB in an attempt to embarrass the diplomat and have him removed from Russia. Later that year, London’s former deputy mayor, Ian Clement, admitted he was lured by a female Chinese secret agent, who drugged him and ransacked his Beijing hotel room after having sex with him. Clement said he fell for what he called “the oldest trick in the book” while in Beijing to “build contacts with potential investors” for the 2012 Summer Olympics in London. Sir Christopher Meyer, a career diplomat with the Foreign Office, who served in several countries during his career, including the Soviet Union, has written about the case of Sir Geoffrey Harrison, Britain’s ambassador to Moscow from 1965 to 1968. The ambassador, said Sir Christopher, “had to leave [the Soviet capital] in a hurry, having fallen for the charms of his Russian maid –trained and targeted, of course, by the KGB”. Read more of this post

CIA ‘seriously damaged’ China’s overseas spy network, sources say

Ministry of State Security branch office in Hubei Province, ChinaBy JOSEPH FITSANAKIS | intelNews.org |
A high-level Chinese security official, who was arrested earlier this year in China for spying for the United States, compromised several Chinese agents operating on American soil, according to sources. Reuters news agency, which broke the initial story of the Chinese official’s arrest earlier this month, published last week a lengthy update on the spy affair. The article quoted “two sources with direct knowledge on the matter”, who claimed the issue was considered serious enough in Beijing to prompt the personal intervention of Chinese President Hu Jintao. Jintao, who is also General Secretary of the Communist Party of China, personally ordered an investigation into the case, said Reuters. The investigation focused on China’s Ministry of State Security (MSS), China’s primary intelligence agency, where the accused spy was reportedly working at the time of his arrest. Although Chinese media have remained silent on the issue, the arrested official is said to have worked as a senior aide to MSS Vice Minister Lu Zhongwei. The Reuters article alleges that the investigation, which is said to be continuing, has concluded that the aide had been a paid informant of the US Central Intelligence Agency, and that the information he provided to the CIA included “political, economic and strategic intelligence”. But the sources also told Reuters that some of the government secrets that the MSS aide gave the CIA related to China’s network of spies operating on American soil. The latest Reuters article strengthens the widespread view that the latest espionage scandal caused serious damage to China’s espionage network in the US. Some observers now argue that this represents China’s most damaging espionage scandal since 1985, when Yu Qiangsheng, a senior Chinese intelligence official, defected to the United States. Read more of this post

US State Department silent on ‘massive’ China spy revelations

Hillary ClintonBy JOSEPH FITSANAKIS | intelNews.org |
The United States Secretary of State, Hillary Clinton, has declined to comment publicly on the arrest of a senior Chinese government aide, who is said to have conducted “massive” spying for Washington. According to Reuters news agency, who broke the story last week, the aide was arrested several months ago, but both the US and China have chosen to keep the issue under wraps in order “to prevent a fresh crisis in relations” between the two countries. Reuters cited “three sources [with] direct knowledge of the matter”, who said that the aide was employed at a critical post in the office of a vice minister in China’s Ministry of State Security (MSS). The MSS is China’s foremost intelligence agency, with responsibility for both domestic and international intelligence collection. According to the sources quoted by Reuters, the unnamed aide was arrested “sometime between January and March” of 2012 and stands accused of supplying his American handlers with classified information on Chinese espionage activities abroad. According to the report, the accused spy had been working for the US “for several years” and his case could represent the worst breach of China’s MSS in two decades; according to one source, the damage inflicted to the MSS’ operations by this case “has been massive”. Reuters said that the aide, who speaks English, was recruited by the US Central Intelligence Agency, and was paid “hundreds of thousands of US dollars” to provide “political, economic and strategic intelligence” to American intelligence officers. Read more of this post