Monday, June 25, 2012

Spy vs. Spy-Spies multiply like coathangers in China and the USA

                                                             Courtesy of Mad Magazine

How many intelligence -- okay honestly, spy -- agencies does a country really need?

Anywhere between eight and 17 and possibly more if you’re referring to China and the United States. The US, in fact, recently established its newest spy agency, which is specifically targeted at China, among others.

The newly created Defense Clandestine Service approved by the Pentagon in late April has been formed to recruit spies from the US Defense Intelligence Agency to work undercover in the guise of businessmen, according to news reports. In reality, they will be running covert operations abroad where there are perceived long-term threats to US national interests.

This latest move, to focus on strategic issues like China’s rising power and the nuclear threat from North Korea and Iran, will bring to 17 the total number of formal intelligence organizations in the US, which already boasts 16 intelligence agencies spread across the armed services, defense, homeland security, justice and state departments.

The US pretzel palace

Spy agencies aside, China itself has over the past few years established as many as eight “National Intelligence Colleges” in major Chinese universities, each with an “espionage department” to recruit some 300 students each year. A report from the online news portal Strategy Page says they are to be trained as spies and placed specifically to steal Western technology. As they say in the sleuthing trade, intelligence needs good solid enemies and a reliable threat: actual, perceived or potential.

The threat of corporate espionage has recently become a hot topic in the US, with several high-profile cases involving household names like DuPont, Motorola, Dow Chemicals, Boeing, etc, reportedly crying foul at alleged Chinese espionage activities, which China has denied time and again.

Corporate espionage has cost US companies at least US$13 billion in recent years, with China being the most persistent perpetrator, according to the Federal Bureau of Investigation (FBI). The FBI recently made headlines with their nationwide billboard advertising campaign warning the American corporate world on the threats of corporate espionage.

In another recent move, an FBI press release in late May was titled "How to Spot a Possible Insider Threat" which serves exactly that purpose: offering tips on how to find warnings and telltale signs that employees and fellow colleagues are spying and stealing trade secrets from the company.

It is hardly a one-sided affair, though. Counter to US claims, China also has something to offer on the table. In one recent high profile case, China reportedly caught a secretary to a Chinese vice-minister in the security ministry who has allegedly been passing secrets to the US for years.

Interestingly, the secrets pertained to China's overseas espionage activities, according to Reuters. This was probably the most serious Sino-US spy case made public since 1985 when Chinese intelligence officer Yu Qiangsheng defected to the US and revealed how a retired CIA analyst had spied for China, Reuters said.

So what gives?

The inconvenient truth is that there is no real prospect that the intelligence industry on either side - both espionage and corporate espionage activities - would just wither away.

No doubt intelligence had become highly politicized these days. Intelligence agencies always need a permanent adversary to justify their everlasting and ever-growing existence and influence. And intelligence gathering is increasingly being bent for political purposes, as evident in the disaster perpetrated by the administration of George W Bush in subverting the entire US intelligence community to come up with specious claims that Iraq possessed weapons of mass destruction, even taking in then-Secretary of State Colin Powell. Powell nearly ruined a reputation for probity and competence built up over a lifetime by taking specious claims to the United Nations of Iraqi weapons that proved to be nonsense. US troops failed to find proof of Iraqi weapons of mass destruction.

But with the world economy becoming increasingly globalized, commercial intelligence in the form of corporate espionage is fast gaining currency and being recognized as the new tool to gain national advantage: Cyber espionage may be getting a lot of publicity these days but the more conventional cloak-and-dagger type of spying can produce different and perhaps better results compared to the Internet.

If a quick online media scan provides any indication, the conclusion is that the American public is not only going to have to live with constant threats of terrorism but will increasingly be splashed with incidence of corporate espionage from China, often times reportedly and allegedly committed by native Chinese living and working on American soil.

In a previous column, I wrote about how American universities were infected with foreign spies in the guise of students and researchers who were actually on a mission to steal government secrets and technological know-hows for their home countries and US university administrators have approached the Central Intelligence Agency for help.

According to an FBI report I cited then, the open environment of US colleges is “an ideal place to find recruits, propose and nurture ideas, learn, and even steal research data, or place trainees”. And a 2011 US Defense Department report said espionage activities, including “academic solicitation”, jumped eightfold from East Asia, including China, in 2010 from the year before.

On the other hand, China now faces much the same challenge but in the form of US spies posing as supposedly ordinary honest businessmen with their attaché cases running between meetings, boardrooms and factories in mainland China. This may not be new, but at least it is official judging from those reports on the newest US spy agency.

What this means for companies operating or doing business in China, local or foreign alike, is to observe the same beaten-to-death cliché: know your clients. In the jargon of the intelligence business, one needs to get (even more) serious with the “facts-checkie” business by conducting thorough due diligence and background checks on the counter-parties, who may have hidden pasts and no future.

You may be familiar with how some seasoned veteran businessmen and high-level executives boast about how well they thought they know their business partners and clients. Or so they think. The big difference next time is, they may unknowingly be dealing with a real spy in their backyard.

(Vanson Soo runs an independent business intelligence and commercial investigations practice specialized in the Greater China region. A different version of this appeared in The Standard of Hong Kong. Email:

1 comment:

  1. Hi:
    What an insightful post. It was especially enlightening.

    This fellow is obviously a thinking person and I will be watching for more by him.

    Good work.

    thanks again.

    jim rush