Tag Archives: Liberty Security & the Law

The China Card: Evidence of Beijing’s Involvement in Democratic Fund-raising Raises Anew Security Concerns

(Washington, D.C.): For some time, the
Center for Security Policy has been
concerned that the activities of John
Huang — the Chinese-born former
Taiwanese fighter pilot, Indonesian
businessman and Democratic fundraiser who
served as a Principal Deputy Assistant
Secretary for International Economic
Policy in the Bill Clinton/Ron Brown
Commerce Department — might entail much
more than breaches of campaign finance
law. In fact, as the Center noted on 1
November 1996,(1)
Huang’s actions may have
constituted a serious breach of “the
most fundamental measures for protecting
sensitive information bearing on the
national security” that could
“translate into vulnerabilities that
would be exploited by America’s enemies
and/or its commercial competitors.”

Do All Roads Lead to
Beijing?

A front page story in today’s Washington
Post provides fresh and
disturbing evidence that such
concerns may justified. According to the
article, written by Bob Woodward and
Brian Duffy:

“A Justice Department
investigation into improper
political fund-raising activities
has uncovered evidence that representatives
of the People’s Republic of China
sought to direct contributions
from foreign sources to the
Democratic National Committee
before the 1996 presidential
campaign, officials
familiar with the inquiry
said….The information
gives the Justice Department
inquiry what is known as a foreign
counterintelligence component,
elevating the seriousness of the
fund-raising controversy…”
(Emphasis added.)

In light of this information, it is worth
revisiting observations made by the
Center in its 1 November Decision
Brief. These include the
following points concerning John Huang’s
access to classified information and his
suspicious connections, including those
derived from his pre-Commerce employment
with the Indonesia-based Lippo Group and
several of its subsidiary companies and
banks. One of Lippo’s enterprises is the Hong
Kong Chinese Bank, Ltd. Mr.
Huang’s biography indicates that he was
the bank’s Vice President for
International Banking between March 1985
and September 1986.

The
China Connection?

  • On 7 November 1992, four days
    after Bill Clinton’s election in
    1992, the Lippo Group sold 15% of
    its interest in the Hong Kong
    Chinese Bank to China
    Resources (Holdings) Company Ltd.
    — the commercial arm of
    Communist China’s Ministry of
    Foreign Trade and Economic
    Cooperation. China Resources is
    used by Beijing to control its
    investments and trade abroad. It
    has been called one of the PRC’s
    largest and most influential
    enterprises in Hong Kong.

  • The Hong Kong Chinese Bank
    transaction was reportedly
    structured in such a way as to
    avoid the requirement to obtain
    approval from the Hong Kong Stock
    Exchange. On 17 July 1993, China
    Resources increased its holdings
    from 15% to 50% —
    paying a 50% premium over the net
    asset value and realizing a cool
    $164.8 million profit for Mr.
    Huang’s employer at the time,
    Mochtar Riady, chairman of Lippo
    Group.

A Connection to Chinese
Intelligence?

  • As noted by William Safire in his
    28 October 1996 column in the New
    York Times    , China
    Resources also has another
    important function: providing a
    cover for Chinese espionage.
    In 1994, Nicholas Eftimiades, a
    former naval and State Department
    intelligence officer now employed
    as a Defense Intelligence Agency
    analyst, authored a book entitled
    Chinese Intelligence
    Operations    . In it, Mr.
    Eftimiades wrote:

    • “[Chinese
    intelligence] case
    officers make extensive
    use of commercial covers.
    For example, a
    vice president of the
    China Resources
    (Holdings) Company Hua
    Ren Jituan     in Hong
    Kong is traditionally a
    military case officer
    from Guangzhou.
    This officer coordinates
    the collection activities
    of other intelligence
    personnel operating under
    Hua Ren
    cover.”

  • Mr. Safire called attention to an
    alarming op.ed. article that
    appeared in the Toronto Globe
    and Mail     on 5 September
    1995. Entitled “Beware the
    Threat of Chinese Spy Games”
    and authored by David
    Harris    , a former chief
    of strategic planning with the
    Canadian Security Intelligence
    Service, this article describes
    the multifaceted effort being
    made by Chinese agents to: divert
    Western high technology, acquire
    other militarily relevant and
    commercial secrets, cultivate
    agents of influence and coerce
    overseas Chinese students to
    serve as “sleeper
    agents.”

  • While aimed at a Canadian
    audience, the following excerpt
    from the Harris op.ed. just
    as easily applies to the United
    States     — and is of
    particular interest in the
    present context:

    • “In dealings with
    Chinese officials,
    Canadians should
    understand that PRC
    diplomatic, cultural and
    intelligence activity is
    a seamless
    web….Canadians of
    Chinese ancestry must be
    warned of the
    PRC’s strong preference
    for recruiting ethnic
    Chinese using leverage
    and ‘help China’ appeals    .
    China’s use of guanxi
    networks — social
    relationships built on
    favors — is the bedrock
    of Chinese intelligence
    collection. The approach
    reflects [Beijing’s]
    tendency to rely on a
    great many sources, each
    collecting small — and
    not very incriminating —
    amounts of
    information.”

  • Mr. Harris also made a point of
    spotlighting China Resources
    (Holdings) Company as a front for
    Chinese intelligence. “U.S.
    intelligence even says Hong
    Kong’s China Resources Holding
    Company traditionally reserves
    one vice-presidential position
    for a Military Intelligence
    Department (MID) intelligence
    officer.” Mr. Harris
    has described the China Resources
    involvement with the Hong Kong
    Chinese Bank as a “textbook
    Communist Chinese influence
    operation.”

What Background Check?

  • Given U.S. intelligence’s
    knowledge of the nature and
    activities of China Resources,
    one would have thought that a
    Commerce Department request to
    grant a Top Secret security
    clearance to an ethnic Chinese
    who, although a naturalized
    American citizen, was formerly
    employed by organization in
    partnership with China Resources
    (Holdings) Company would have
    triggered red flags. In fact, it
    appears that no foreign
    background check was conducted on
    Mr. Huang at all before he was
    issued an “interim Top
    Secret clearance    .

  • Instead, on 31 January
    1994, Mr. Huang received a
    “waiver of background
    investigation prior to
    appointment”     from
    the Commerce Department’s
    security office. This was done on
    the grounds that “there
    was a critical need for his
    expertise in the new [sic]
    Administration for Secretary
    Brown.    “

  • Although “final
    clearance” was “held in
    abeyance pending the results of
    Huang’s background
    investigation,” according to
    congressional experts, it appears
    that no overseas checks
    were ever conducted     of
    Mr. Huang’s extensive
    international travel, his
    extended stays abroad, his family
    overseas or his foreign employers
    either during the five-months
    between his waiver and his first
    day on the job (18 July 1994) or
    in the subsequent three months
    until his final clearance was
    adjudicated (18 October 1994).

Business As Usual in the
Clinton Administration?

  • The Washington Times on
    31 October 1996 quoted Commerce
    spokeswoman Anne Luzzatto as
    saying that a “foreign
    background check was not required
    under security rules because Mr.
    Huang did not reside abroad in
    the previous five years before he
    took the Commerce Department
    position.” This appears to
    be inconsistent with a 1991
    directive signed by
    then-President George Bush
    requiring foreign background
    checks on anyone who has lived
    overseas within the previous ten
    years — which Mr. Huang
    certainly did. After the Huang
    Affair burst into public view,
    then-House Intelligence Committee
    Chairman Larry Combest (R-TX),
    wrote Secretary Brown’s
    successor, Mickey Kantor, saying
    “[The approach taken to
    streamline Mr. Huang’s clearance]
    was contrary to standard
    procedures    .” (Emphasis
    added.)

  • Commerce and Office of Personnel
    Management representatives
    nonetheless told the Baltimore
    Sun     on 30 October 1996 that
    Mr. Huang’s “background
    investigation was as thorough as
    it was required to be.” The Sun
    said Ms. Luzzatto claimed
    “investigators were able to
    gain the needed information
    without interviews
    overseas.”

  • David Harris, however,
    has described the placement of a
    person with Mr. Huang’s
    background in a position of
    Deputy Assistant Secretary of
    Commerce without an FBI security
    clearance as
    “horrendous” and
    something that “sends
    shudders through any intelligence
    officer’s body.”

  • Interestingly, according to the
    31 October 1996 Wall Street
    Journal    , the Commerce
    spokeswoman also averred that
    “Mr. Huang couldn’t have
    used     his security clearance
    before he officially joined the
    agency as a top international
    trade policy official in July
    1994.” (Emphasis added.) In
    view of the “critical
    need” Secretary Brown
    apparently had for Mr. Huang’s
    expertise, it stands to
    reason that he may have been
    involved in meetings,
    conversations, briefings, etc. in
    which he was exposed to
    classified information while
    still on the Lippo Group’s
    payroll.

  • There is no dispute,
    however, that Mr. Huang was
    exposed to highly sensitive
    intelligence data and competition
    sensitive trade information once
    he collected his “golden
    handshake” severance package
    from Lippo and joined the
    Commerce Department     —
    becoming what Mr. Riady called
    “my man in the Clinton
    Administration.”

Who Was John Huang Working
For?

Today’s Washington Post sheds
new light on the extent of the contact
Huang had with Chinese officials while he
had access to classified information at
the Commerce Department:

“During Huang’s 18 months at
Commerce, Huang was scheduled to
attend 37 intelligence briefings,
including briefings on China, and
saw more than two dozen
intelligence reports. From his
Commerce department office, Huang
made more than 70 phone calls to
a Lippo-controlled bank in Los
Angeles….Huang’s message slips
from the Commerce Department also
show a call from one Chinese
Embassy official in February 1995
and three calls from the
embassy’s commercial minister in
June and August of that year.
According to Huang’s Commerce
Department desk calendar
entries…he had three meetings
scheduled with Chinese government
officials. He was slated to go on
a U.S. government-sponsored trip
to China in June 1995 that was
canceled. He attended a policy
breakfast at the Chinese Embassy
in October 1995 and a dinner
there the same month.

“One of the many
unexplained records from Huang’s
files shows an unusual travel
pattern in the fall of 1995.
His expense account records show
he left his Commerce Department
office to visit the Indonesian
Embassy…claiming a $5
reimbursement for taxicab fare.
The expense records indicate
Huang did not return to his
office at Commerce until the
following day — when he took
another $5 cab ride, not from the
Indonesian Embassy, but,
according to his records, from
the ‘residence of the Chinese
ambassador.'”

The Bottom Line

Today’s revelations in the Washington Post
only intensify the Center for Security
Policy’s longstanding fears that the
Clinton Administration’s insouciance
about personnel and information security
are an invitation to foreign penetration
and suborning.(2)
Perhaps the most important insights that
will emerge from the ongoing Department
of Justice investigation of the
Clinton/Democratic National Committee
fund-raising operation — and the
congressional inquiries that will shortly
get underway — may be the dangers posed
by such practices and the urgent need to
hold those responsible fully accountable
and to implement at once the necessary
corrective actions.

– 30 –

1. See the
Center’s Decision Brief
entitled ‘High Crimes and
Misdemeanors’? The Huang Caper Reinforces
Concerns About Clinton Malfeasance on
Security Matters ( href=”index.jsp?section=papers&code=96-D_109″>No. 96-D 109,
1 November 1996).

2. See, for
example, the Center’s Decision
Brief entitled The
Clinton Security Clearance Melt-Down:
‘No-Gate’ Demonstrates ‘It’s the People,
Stupid’ ( href=”index.jsp?section=papers&code=94-D_32″>No. 94-D 32,
25 March 1994).

Hold the Hosannas: Toby Gati Raises New Questions About Her Judgment, Discretion with Regard to Classified Information

(Washington, D.C.): Earlier this week,
the Assistant Secretary of State for
Intelligence and Research, Dr. Tobi Gati,
appeared before the Senate Select
Committee on Intelligence. In the course
of this meeting, she received
congratulations from Committee members
concerning reports that she had been
cleared following a State Department
Inspector General investigation into
alleged mishandling of classified
information by Mrs. Gati and other
possible security breaches.

In fact, as the Center for Security
Policy noted in a recent Decision
Brief,(1)
such congratulations may be a bit
premature insofar as the report by the
Inspector General has yet to be completed
with respect to all aspects of the
investigation. Even the documentation
that has been completed has not
been released publicly to permit an
independent evaluation of the findings.

Such an independent inquiry into Mrs.
Gati’s judgment and conduct with respect
to classified information is all the more
needed in light of revelations published
in today’s Washington Times:
Mrs. Gati reportedly gave the Washington
Post’s R. Jeffrey Smith — a
journalist with a record of publishing
leaked information (interestingly, not a
little of it seemingly intended to cast
the Clinton Administration in a favorable
light)(2)
— a guided tour of the State
Department’s Cryptographic Support Area.
According to the Times:

“This room is ‘a very secure
area where highly classified
documents relating to codes and
electronic intercepts are
kept….Contrary to security
rules, Mr. Smith, who’s
broken a number of stories based
on leaked intelligence, was
brought in unannounced
to the Cryptographic Support Area
of Room 6510 (the State
Department’s Intelligence
Operations Center).'” href=”97-D22.html#N_3_”>(3)
(Emphasis added.)

The Times reports that this
visit was so unusual that an
employee of the National Security Agency
assigned to duty at the State Department
felt compelled to call NSA headquarters
and “alert the agency’s chief of
operations to the possible security
breach.” An unnamed
American official is quoted as saying
that “[Mrs. Gati] just brought him
in unannounced, much to the horror of the
NSA watch officer…[this incident was]
an example of her cavalier attitude
toward security.”

Although the
particulars of this episode are in
dispute (State Department Spokesman Glyn
Davies insists that Smith received an
unclassified briefing and was shown the
secure area without actually being
admitted to it), the episode bespeaks an
insensitivity to prudent information and
personnel security practices that has
characterized much of Toby Gati’s service
in the Clinton Administration.

Of particular concern, has been Mrs.
Gati’s enthusiasm — which she shares
with many of her colleagues in the
Clinton Administration — for the sharing
of American intelligence products with
foreign governments and multilateral
organizations (such as the United
Nations). For example, as the Center for
Security Policy has previously noted:

“In May 1995, the State
Department’s senior intelligence
official — Assistant Secretary
of State Toby Gati — told
Congress that the United States
had to share intelligence with
the U.N. even when it is not
in U.S. interests to do so.
Her reasoning? Doing so might
assure that the United Nations
would be willing to make use of
American secret information when
Washington wanted it to.” href=”97-D22.html#N_4_”>(4)

The Bottom Line

It is incumbent upon the congressional
intelligence committees to examine with
care the Clinton Administration’s dubious
practices concerning information and
personnel security that have been
illuminated by the controversial Mrs.
Gati. In particular, the Center for
Security Policy hopes that the Senate
Select Committee on Intelligence will
take a hard look at the directive on
intelligence-sharing that was initially
proposed by former Director of Central
Intelligence John Deutch, a directive
that would have made it far easier to
share U.S. secrets with foreign
intelligence “consumers.” This
is a particularly appropriate subject for
the Committee to consider as part of its
examination of the policy views and
judgment of Anthony Lake — President
Clinton’s choice to succeed Mr. Deutch
and Tobi Gati’s former boss at the
National Security Council.

– 30 –

1.
See the Center for Security Policy’s
recent Decision Brief entitled,
Good News, Bad News for U.S.
Intelligence: State I.G. Clears the
Gatis; Rep. Solomon Asks FBI
Investigation of John Huang
(No. 97-D 12,
23 January 1997).

2. While the State
Department has frequently criticized
leaks to the press that have portrayed
its actions — or inactions —
unfavorably, it has not evinced much
concern about those published by Mr.
Smith that are deemed to be helpful to
the Clinton Administration.

3. The Times
goes on to note that Mrs. Gati is
evidently on extremely good terms with
Mr. Smith, as evidenced by her confusion
when she took a phone call from
“Jeff Smith” and began a
conversation thinking that she was
speaking with her friend from the Post.
In fact, she quickly learned, she was
speaking with Jeffrey H. Smith, then the
general counsel of the CIA!

4. See, for
example, its Decision Brief
entitled Before U.S.
Intelligence Can Be Reformed, the Clinton
Administration Must Stop Deforming It
(No. 96-D
44, 6 May 1996).

Farrakhan’s behavior is beyond ‘shameful’

In recent weeks, Nation of Islam leader Louis Farrakhan has been touring the capitals of several of the nations most hostile to the United States: Libya, Iran and Iraq. In the course of meetings with the likes of Libya’s Moammar Gadhafi, Iranian President Rafsanjani and Saddam Hussein, Farrakhan has personally identified with, expressed support for and/or offered to serve the radical anti-American agenda of his hosts. Reported highlights of this appalling performance include the following:

Libya

  • According to JANA, the official mouthpiece of the Libyan government, during the course of Farrakhan’s visit, Gadhafi pledged $1 billion as part of a joint effort to "mobilize the oppressed minorities to play a significant role in American political life." (1)
  • JANA also reported that Gadhafi said "American blacks could set up their own state within the United States with the largest black army in the world."
  • Gadhafi added "Our confrontation with America used to be like confronting a fortress from outside. Today, we have found a loophole to enter the fortress and to confront it from within."
  • JANA reported that Farrakhan replied "I have met my brother, Colonel Moammar Gadhafi, for the sake of unifying Arabs, Muslims, blacks and oppressed communities in America to play a strong, significant role not only in the American elections, but in American foreign policy."
  • After visiting the ruins of one of Gadhafi’s residences that was destroyed in the 1986 U.S. air raid on Tripoli (conducted in retaliation for a Libyan terrorist attack against American personnel in Germany), Farrakhan wrote in the visitors’ book: "I implore God to punish our enemies hundreds of times, just as they did to us and against you."

Iran

  • According to Agence France Presse, "Farrakhan paid tribute [in Tehran]…to Iran on the anniversary of its 1979 Islamic revolution as a crowd of tens of thousands chanted ‘Death to America.’" (2)
  • After laying a wreath on the tomb of Ayatollah Ruhollah Khomeini, Farrakhan declared: "I personally love Imam Khomeini"; "Iran is now in the vanguard of the Islamic revolution sweeping the earth"; "the Islamic revolution represents a perfect model of a system of government based on the holy Koran;" and "we will use American Muslim unity as a lever of pressure against the arrogant policies of the United States."
  • Farrakhan’s comments moved Iranian President Ali Akbar Hashemi Rafsanjani to observe that the former was "expressing the love of 30 million U.S. blacks for the Islamic revolution. Our revolution enjoys the support of the oppressed throughout the world, notably in the United States."
  • The Washington Post noted that "Among the reports to reach Washington, a story in an Iranian newspaper quoted Farrakhan as saying in Tehran: ‘You can quote me: God will destroy America at the hands of the Muslims.’"

Iraq

  • According to Reuters, "before meeting with Saddam Hussein [today], Farrakhan was taken on a tour of a hospital in Baghdad and al-Amiriya shelter in which hundreds of civilians were killed in a U.S. raid during the 1991 Gulf War…’And I must say, if I were made of stone, seeing what I saw today would bring tears to my eyes.’"
  • He also "described Washington’s persistence to keep the sanctions on Iraq intact as ‘a very wicked policy that must be stopped immediately.’"

Nick Burns, Unplugged

So outrageous has Louis Farrakhan’s conduct been over the past few weeks that even the Clinton Administration State Department felt constrained to condemn it. As spokesman Nick Burns put it yesterday:

"I think it’s shameful that an American citizen, much less a major religious leader in the United States, would cavort with dictators like Gadhafi and the Iranian leadership. I think it’s shameful that he would stand in Tehran and declare that his fellow countrymen live in a country which is the Great Satan, when those people who stood with him in Tehran took American diplomats hostage…It’s wrong for another American to go and to cavort with dictators who have inflicted terrorism (3) upon the United States." (4)

While the State Department characterization of Louis Farrakhan’s behavior is clearly accurate as far as it goes, it neither does justice to the man nor establishes a determination on the part of the Clinton Administration to bring him to justice for actions apparently in violation of U.S. law. According to a preliminary review of relevant law conducted by the Congressional Research Service on behalf of Rep. Peter King (R-NY), Farrakhan may have violated five U.S. laws. These include: the Foreign Agents Registration Act, Libyan sanctions regulations, restrictions on campaign contributions by foreign nationals and passport travel restrictions.

Incredible as it may seem, the apparent absence of any laws on the books that would make it a crime simply to organize essentially a Libyan Fifth Column for the purposes of accomplishing America’s violent dismembering may mean that — like Al Capone — Louis Farrakhan could only be prosecuted for more prosaic violations. Even so, as Rep. King, who has described Farrakhan’s actions as "treacherous and cowardly," declared yesterday:

"It is time to pierce the double standard that has for too long protected Farrakhan and his followers and end the special treatment they have received from certain agencies in [the Clinton] Administration. Any American citizen who consorts with the sworn enemies of the United States and seeks their financial backing must be held fully accountable for their actions.

"Very simply, there is no way that I will allow Farrakhan to skirt the law and continue to seek the financial backing of terrorist regimes to advance his racist political agenda. I am committed to ensuring that the laws on the books against this type of treachery are fully enforced."

The Bottom Line

Unfortunately, the Farrakhan road-show comes at a moment when U.S. foreign policy interests are being subordinated across-the-board to President Clinton’s reelection bid. Consequently, it seems unlikely that his Administration would be willing to emulate Rep. King’s "profile in courage"; after all, doing so would entail actually prosecuting the organizer of the "Million Man March" and risk alienating a critical Democratic constituency. (It is hard to believe that a David Duke or an Aryan Nation leader would be accorded the same treatment were they to have sought foreign support for their hateful separatist agendas.)

Farrakhan’s activities in Libya, Iran and Iraq are a chilling indication of his deep-seated loathing of this country and his determination to make common cause with its enemies. At a minimum, President Clinton must order intensified FBI surveillance of the Nation of Islam in order to minimize the threat it might come to pose to public safety and the national security. The Administration must also permanently end contractual dealings between federal agencies like the Department of Housing and Urban Development that serve both to enrich and legitimate the organization. For its part, Congress must hold hearings that examine the need for new legal protections against the sort of "loophole" Gadhafi claims to have found in Farrakhan.

If Mr. Clinton and the Congress are unable — or unwilling — at the very least to take such steps in response to Louis Farrakhan’s ominous and highly provocative actions, it will be worse than "shameful." It will be correctly seen as scandalous and a serious political liability to Americans who, without regard for race or religious belief, find Farrakhan’s behavior overseas inimical to vital U.S. interests and tantamount to treason.

 

 

– 30 –

(1) This is not the first time Gadhafi has provided funding for the Nation of Islam. According to nationally syndicated columnist Cal Thomas, "Mr. Gadhafi ‘loaned’ Mr. Farrakhan $5 million for various business projects associated with the Nation of Islam. The same year, Mr. Gadhafi told Nation of Islam followers by satellite that he wanted to help American blacks overthrow oppression through armed struggle."

(2) If the same standard is applied as was used a few months ago to hold Israeli opposition leader Benjamin Netanyahu responsible for an anti-Rabin placard he had not seen at a large political rally, then Farrakhan is certainly guilty by association with enemies of the United States for having done nothing to disavow the incendiary urgings of the Iranian mob.

(3) Interestingly, Mr. Burns stated that "Gadhafi bombed Pan Am 103 and is responsible for the death of 269 people." While assuredly true, such a statement makes a mockery of the international campaign mounted by the Bush and Clinton administrations to secure the extradition from Libya of two Gadhafi operatives fingered with having perpetrated this heinous act, but leaving their boss unindicted.

(4) It is regrettable that the indignation which Mr. Burns expressed on this score has been undercut by his own boss, Secretary of State Warren Christopher, and other senior U.S. officials who have recently been cavorting with state sponsors of terrorism against Americans from Serbia to Syria, from Northern Ireland to North Korea.