[Clips] Why Red China targeted the Clinton White House

[R.A. Hettinga]

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<http://www.findarticles.com/p/articles/mi_m1571/is_n19_v13/ai_19448569/print>



  FindArticles > Insight on the News > May 26, 1997 > Article > Print friendly

  Why Red China targeted the Clinton White House - President Bill Clinton;
  China's interest in U.S. computer technology - Cover Story

  Timothy W. Maier

  Beijing's leaders have set their sights on American encryption and
  satellite technologies that, once obtained, could kill vital U.S.
  intelligence operations worldwide. The covert plot was launched in 1992 --
  the same year Chinese operatives signed a military intelligence agreement
  to share secrets with Russia.

  Red Chinese spies are among us. Their infiltration is so deep, say U.S.
  intelligence experts, that the prime targets appear to be America's
  supersecret encryption and satellite technologies. Once obtained, their
  possession by Beijing could provide access to the most sensitive U.S.
  military secrets and wreck American intelligence-gathering worldwide.
  Interviews with Russian and U.S. intelligence specialists indicate that
  China also has plotted covertly to acquire top U.S. computer technology to
  disrupt U.S. intelligence operations and prevent American spies from
  monitoring Red Chinese activities.

  The current problem involves Bill Clinton's Chinese friendships,
  fundraising and what some consider the president's contempt for security.
  But it began much earlier.

  In the 1970s, under the leadership of then-Secretary of State Henry
  Kissinger, the United States became a willing partner of Beijing by
  providing computer technology for Chinese missiles, ostensibly for defense
  against a Beijing-feared Russian invasion. Senior U.S. intelligence sources
  say those missiles now are pointed at Los Angeles, Hawaii or Alaska. In the
  meantime Kissinger has become a multimillionaire trade partner for American
  firms conducting business in China. And, as Premier Li Peng publicly has
  stated, "Chinese will never forget the contributions made by Kissinger"
  (see "Lion Dancing With Wolves," April 21).

  Two decades later the policy of building up the Red China military
  continues. Insight has learned that a covert operation run by the CIA and
  National Security Council, or NSC, last year resulted in providing Beijing
  with missile hardware and software including programming and targeting
  capabilities and guidance systems, according to sources familiar with that
  operation. The NSC supposedly arranged the deal to set up a disinformation
  campaign in which future US. data might be used to disrupt Chinese
  intelligence the sources say. "This was real-time data--gone--maybe 10, 20,
  30 billion dollars' worth of technology," one source says. "The thought was
  that we had to give away some good stuff for them to take the bad stuff."

  A 1995 General Accounting Office, or GAO, report ordered by the Pentagon
  and State Department and critical of exports to China portrays the United
  States as being a blind trading partner of China. The unclassified report
  shows that the United States approved 67 export licenses to China for
  military-industrial products between 1990 and 1993, including $530 million
  of missile-related technology. "The Department of Justice is concerned the
  Department of Commerce might not be identifying or seeking interagency
  concurrence on all potential missile technology export-license
  applications," the report de-clares.

  According to William Triplett II, former chief Republican counsel to the
  Senate Foreign Relations Committee, the British and French were furious
  when Clinton dismantled the Coordinating Committee for Multilateral Export
  Controls, or COCOM -- an international arrangement to prevent export of
  military high-tech. That decision, he says, secured the export to Russia
  and China this year of supercomputers capable of building sophisticated
  nuclear-guidance systems. California-based Silicon Graphics, now under
  federal investigation for illegal exporting, sold the supercomputers to the
  China Academy of Sciences and to a Russian nuclear-weapons lab, claiming
  the sales were based on an understanding that the technology would be used
  for environmental purposes. The company says it now feels terrible about
  these sales.

  Insight also has learned that Chinese agents have formed a secret
  partnership with Russian military intelligence, according to intelligence
  specialists working closely with the FBI. Intercepting signals from
  satellites and breaking into private and government computer systems are
  part of the purpose of this joint agreement secretly signed in 1992, says a
  former high-ranking Russian military intelligence agent who was stationed
  in Beijing and has spoken exclusively to Insight. "They share sensitive
  information with the goal of destroying the United States," the agent says,
  noting that the U.S. Navy port facilities at Long Beach, Calif., recently
  signed over to the China Ocean Shipping Co. pending civil litigation, are
  to be used as a joint Chinese-Russian intelligence operation.

  The FBI learned of a major Chinese espionage plot to influence the
  elections last year and launched an investigation. The ex-Russian agent
  says China's political leaders initiated the operation after meeting to
  discuss how best to penetrate the U.S. government. "It was a political
  group decision," the source observes.

  What's surprising, says a former NSC staffer, is the reaction in the
  administration when the FBI reported the Chinese plot to influence the
  elections. "We have the smoking guns that the Chinese are trying to direct
  covert actions against the U.S., and nothing is done," the former staffer
  says. "Any other time it would have meant the expulsion of the Chinese
  ambassador."

  The ex-Russian intelligence agent's allegation of Chinese penetration has
  been confirmed by Randolph Quon, a former Hong Kong investment banker for
  two decades. Quon is close to several of the Chinese princelings--the sons
  and nephews of China's ruling leaders who head the major Red Chinese
  trading companies. He says China had a "guan-xi," or connection to get
  access, for its U.S. political operation. "Li Peng was told the Lippo Group
  had a back channel to the White House, to Bill Clinton," Quon says, through
  "dealmaker" John Huang, the former Commerce official and ex-vice president
  of the Indonesia-based Lippo Group, which had extensive joint ventures with
  Chinese power companies. All utility companies in China are operated by the
  People's Liberation Army, or PLA, say defense-intelligence specialists.

  Quon claims 20 members of the Communist Party undertook a "
  strategic-information warfare campaign in the U.S." Part of that plan, he
  says, was taking control of Lippo -- a company that worked to form a strong
  relationship with China for economic and military opportunities. Four days
  after Clinton's 1992 victory the Lippo Group sold 15 percent, and then
  later 50 percent, of its interest in the Hong Kong Chinese Bank to China
  Resources [Holdings] Co., a Chinese military front company for spy
  operations, according to U.S. defense-intelligence agents.

  There were a number of objectives to these moves, but espionage headed the
  list. The key was encryption. A former NSC expert on intelligence
  encryption says China needs encryption technology badly and targeted the
  United States to get it. "The Chinese are into information warfare--the
  ability to use computers to collect intelligence and conceivably to damage
  the U.S.," says the NSC staffer who served under Reagan. "It would cause
  real trouble for the U.S. if they obtained US. encryption technology. It
  will be a hit against the quality of American intelligence operations."

  How vulnerable are U.S. defense computers? An unclassified GAO report
  ordered in 1996 by the Senate Governmental Affairs Committee warns there
  were 250,000 hacker attacks in 1995, of which 65 percent were successful
  penetrations. In addition, it says, 120 countries are capable of breaking
  into 2.1 million US. defense computers. Two Dutch hackers successfully
  tapped into computers during the Persian Gulf War and learned the precise
  locations of troop deployments. They then attempted to sell the classified
  information to Saddam Hussein, who turned it down because he thought it was
  a US. trick, according to the report. "At a minimum, these attacks are a
  multimillion-dollar nuisance to defense," the GAO report states. "At worst,
  they are a serious threat to national security."

  Senior U.S. intelligence officials say the Chinese waited patiently for an
  opportunity to strike and found vulnerability in a White House that seemed
  more concerned with filling a depleted Democratic National Committee war
  chest than with national security. Clinton denies security has suffered
  under his tenure, and Vice President Al Gore says he did nothing wrong in
  granting access to big-buck donors, but claims he won't "do it again."

  Sven Kramer, who long served the NSC at the White House under Republican
  and Democratic presidents, says he is disgusted with the cavalier actions
  of an administration that critics say put a dialing-for-dollars campaign
  ahead of national security. Kramer asserts he finds it difficult to believe
  that the United States would surrender key ports in Long Beach and at
  either end of the Panama Canal to a PLA-led shipping company called COSCO.
  He cites the "foolishness of the intelligence community" for not blowing
  the whistle on these operations.

  He is not alone. Bipartisan former intelligence officials, who asked not to
  be identified, trace this national-security breakdown to Clinton's
  out-of-control fund-raising campaign. They cite the selling of White House
  access to drug dealers and heads of Chinese gun-smuggling companies as well
  as presidential one-on-ones with sons and daughters of the highest
  commanders in the PLA. They note that security clearances were overlooked
  and access to the president and high administration policy wonks was
  granted without so much as a FBI background check even for White House
  coffee-klatsch guests.

  Remember that in 1992 American voters elected Clinton as one who viewed the
  rulers of China as the "butchers of Beijing." Former Time journalists Ross
  Munro and Richard Bernstein write in their book, Coming Conflict with
  China, that the Chinese realized they needed to turn Clinton around and
  looked for ways to do so. The Chinese call it "zou-hou-men," which
  translates as back door. "The phrase expresses the realistically cynical
  view that qualifications, skill and lower prices mean less in China than
  the ability to skirt the official rules and to slip into the Palace of
  Power via the rear entrance," the authors write.

  One way to skirt the process was to get American businesses to do the
  lobbying for China's "most favored nation," or MFN, trading status and to
  get big donors to persuade Clinton to support MFN. China expert Orville
  Schell, dean of the graduate school of journalism at the University of
  California at Berkeley says the Chinese attempt to influence policy may
  have been a clumsy effort to establish a beachhead, but that the influence
  peddling most likely was done to get American business on their side.

  "I would not be looking for a suitcase of money to a senator and congress,"
  Schell says. "Now there may be some of that. But what is really going on is
  China is doing a more indirect approach -- they are buying and selling more
  joint ventures. China's leaders know it's who you know. They know the real
  influence is with American business because they know businesses can exert
  pressure."

  But for China to influence Clinton it needed a back door to the White House
  to push Beijing's agenda -- or risk losing billions if MFN were rejected.
  The door was there. Enter John Huang, that former vice president of the
  Lippo Group, whose whereabouts now are unknown. Although he was granted
  top-secret clearance on Jan. 31, 1994, Huang officially didn't begin work
  as deputy assistant secretary of Commerce for international economic policy
  until July 18, 1994.

  Senate investigators characterize Huang as a "human vacuum cleaner" who
  sifted through an enormous amount of classified information dealing with
  China as if he knew his opportunity to do so would be short-lived. During
  his 18 months at the Commerce Department, Huang was privy to at least 109
  intelligence briefings -- 70 in 1994 and 39 in 1995, according to recently
  released records from Commerce. The numbers are a far cry from the 37
  classified briefings initially admitted by Commerce, and this has Senate
  investigators extremely upset. "We could have been plugging up holes" and
  controlling the damage, says an angry investigator. "The FBI is now doing a
  damage assessment."

  Other former senior intelligence officers in both NSC and the National
  Security Agency, or NSA, say it would have been extremely unusual for
  Huang, who served in the Taiwan air force, to have been cleared for such
  access without a background check. "That's only done with congressmen,"
  says a former senior NSA official.

  Senate investigators say they are concerned about Huang meeting with a
  Chinese Embassy official inside his Commerce office 30 minutes after being
  briefed by John Dickerson, head of the CIA s office of intelligence liaison
  at Commerce. Records also show Huang placed at least six telephone calls to
  Lippo shortly after intelligence briefings. Alarmed intelligence sources
  say Huang's top-secret clearance would have allowed him to see hundreds of
  classified documents in addition to attending briefings.

  Huang's clearance was not pulled until Dec. 9, 1996, nearly a year after he
  left Commerce to join the DNC fundraising campaign as a finance vice
  chairman, Commerce records show. It is yet to be revealed whether he
  attended classified meetings while at the DNC.

  "What this says is that Huang's security clearance was waived," former NSC
  staffer Kramer says. "That is rare and far too generous of the president.
  The president can waive security if it is considered urgent in order to go
  on a trip or be involved rapidly in a project." Records show Huang was not
  planning any trips.

  Commerce claims the clearance was needed for an International Trade
  Administration security briefing but acknowledges no records exist to show
  the briefing ever occurred. That raises the question: What was Huang
  secretly involved in? Of utmost concern is whether he was briefed on a
  top-secret project dubbed "Clipper Chip." This "bug-on-the-chip" project,
  as some intelligence officials call it, began in 1987 inside the NSA to
  help the Fort Meade, Md., spy agency snoop on its enemies and protect
  secrets in a joint partnership with federal law-enforcement agencies.

  Initially the Clipper Chip was an electronic device used to secure
  telephones, but after years of research the Son of Clipper was developed.
  It was to be placed inside every American-built computer or fax machine to
  protect it from hackers. The chip also permitted wire-tapping through
  unique keys that unlock communications encrypted with the chip. The keeper
  of the keys, according to the plan crafted at the Clinton White House,
  would be the FBI and Commerce. In a storm of controversy loud warnings of
  invasion of privacy came from the private communications sector--with the
  exception of AT&T, which installed the chip. The Clipper Chip was killed
  last year for commercial use, though it remained in federal computers until
  giving way to a new system in March 1997.

  NSA records show Clipper Chip meetings were held with NSA, NSC, CIA, FBI
  and Commerce officials, as well as with former Associate Attorney General
  and convicted Whitewater attorney Webster Hubbell and former Deputy White
  House Counsel Vince Foster, two months before Foster died in 1993.
  Investigators still are trying to determine if Huang attended any of these
  briefings.

  Commerce spokeswoman Brenda Dolan insists that "John Huang has nothing to
  do with the Clipper Chip, nor should he have. He worked in the
  international trade administration. He did not work in export of the
  Clipper Chip." But Senate sources tell Insight that Huang attended weekly
  CIA and 18 China meetings at which such technology may have been discussed.
  His top-secret classification would that have allowed him to view Clipper
  Chip documents if he chose according to intelligence and Senate sources.

  The NSA, one of the strongest supporters of the chip, warns of enemies
  obtaining it. In a partially unclassified document labeled "Secret
  Introduction," the NSA says the "use of strong cryptographic products by
  the myriad of criminal and hostile intelligence agents poses an extremely
  serious and unacceptable threat to effective law enforcement, the public
  safety and national security."

  Dorothy E. Denning, professor of computer science at Georgetown University
  and author of Cryptography and Data Security, supports the use of the chip
  for law-enforcement activities. FBI statistics indicate authorized wire
  taps have led to the conviction of 20,000 felons resulting in $296 million
  in fines, $756 million in court-ordered restitution and $1.8 billion saved
  in potential economic loss.

  Denning claims it nearly is impossible to crack the Clipper systems. "You
  have to penetrate and you would have to get in the building, then you would
  have to get in the safe and then the computer keys," she says. "It's not
  realistic and even if you have the keys it's not useful unless you have the
  right equipment."

  The safe room holding the keys is what Charlie Smith, president of
  Virginia-based Softwar Co. and a critic of Clipper, calls the "Mission:
  Impossible" room, with the big mainframe computer, stacks of classified
  data, secret radio frequencies and wired alarm systems. "It's a highly
  classified library with guards," Smith says. "The clipper or key recovery
  as it is currently being called was supposed to protect government secrets.
  Instead, they have built an electronic version of Pearl Harbor and put it
  neatly in one little row where one guy can walk in and then walk out with
  it."

  There also are others involved in Clinton fund-raising to whom
  congressional committees are anxious to pose questions about interest in
  secret U.S. technology. Ira Sockowitz, a Clinton administration lawyer,
  admitted during a deposition with Judicial Watch, a Washington-based
  watchdog group pursuing the Clipper documents in relation to Huang's
  activities at Commerce, that he walked out of the Commerce Department with
  CIA, NSC and NSA classified files on encryption or decoding software, spy
  satellites, China, Russia and other countries. Sockowitz, who had a
  top-secret clearance, was appointed by Clinton to serve as a special legal
  counsel in Commerce. He says he simply was transferring the files to his
  new post at the Small Business Administration where he became deputy
  administrator in the spring of 1996. The records removed contain some 2,800
  pages, including a classified report called "A Study of the International
  Market for Computer Software With Encryption."

  Sockowitz, now a Washington consultant, claims he never met Huang, although
  the two men worked together on the Asian Pacific American Working
  Group--the principal unit in the DNC responsible for raising about $7
  million in campaign contributions in the Asian communities during
  1996--much of it returned because of questionable origins.

  How spooky does it get? An odd link to this story is that the NSA chose
  Arkansas-based Systematics on Sept. 14, 1990, to construct the "Mission:
  Impossible" room called the Secured Compartmentalized Information Facility,
  or SCIF, in Fort Gillem, Gal, according to an unclassified NSA memo. At
  that time Systematics was run by Jackson Stephens who, along with Mochtar
  Riady and James Riady controlled Lippo's Worthen bank, which gave Clinton a
  multimillion-dollar loan to get through the 1992 presidential election. The
  same Lippo Group, which later dumped Worthen, is linked to China Resources,
  a front for Chinese military-intelligence operations, say U.S. defense
  intelligence sources.

  The concern of the U.S. intelligence community is whether Chinese agents
  penetrated the SCIF. An NSA staffer notes that the Chinese once managed to
  bug the Russian Embassy in Beijing, and that if they built the SCIF "they
  could do a lot of things there."

  That brings the story back to Huang, who worked with the Riadys at Worthern
  Bank and appears to have formed another intriguing friendship with PLA arms
  dealer and White House coffee-klatsch guest Wang Jun. China's Far Eastern
  Economic Review reported in April that Wang admitted to Beijing's political
  leaders that he had paid Huang $30,000 for reasons unexplained. One Senate
  investigator says this could be the "smoking gun" that ties Huang to the
  PLA. If so, it may help prove that the spies among us walked away with U.S.
  national secrets of incalculable value--and tie the operation directly to
  the Clinton team.


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  R. A. Hettinga <mailto: rah at ibuc.com>
  The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
  44 Farquhar Street, Boston, MA 02131 USA
  "... however it may deserve respect for its usefulness and antiquity,
  [predicting the end of the world] has not been found agreeable to
  experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'
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-- 
-----------------
R. A. Hettinga <mailto: rah at ibuc.com>
The Internet Bearer Underwriting Corporation <http://www.ibuc.com/>
44 Farquhar Street, Boston, MA 02131 USA
"... however it may deserve respect for its usefulness and antiquity,
[predicting the end of the world] has not been found agreeable to
experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'