Tiger Trap: America's Secret Spy War With China (17 page)

Unknown to anyone in the Los Angeles FBI office, Katrina Leung had flown to London to join J.J. on the tour of Britain. Dorothy E. "Dot" Kelly, who had become J.J.'s supervisor a few months earlier, admired him greatly. To Kelly, J.J. could do no wrong. The two often lunched together. She decided to surprise him by meeting him at LAX on his return.

Kelly was startled to see both J.J. and
PARLOR MAID
, whom she knew, going through customs.
They had obviously been on the same flight. Kelly greeted J.J. and gave him a ride home. All the while in the car, J.J. worried that his supervisor had spotted Katrina Leung and would question him about it or peach to FBI headquarters. To J.J.'s relief, she did neither.

The inspector general's report of the incident found that the supervisor "was overly dependent on Smith, reluctant to confront him, and inappropriately deferential to him."
As one FBI agent in Los Angeles said, "I've seen Dot bring J.J. coffee at squad meetings."

Another danger signal arose in 1992. According to the Justice Department review, an FBI source reported that a woman named "Katrina" was a double agent "working in the FBI."
Headquarters ordered J.J. to interview the source. J.J. brushed off the tip, saying the source was "a liar and a misogynist," and explaining that the information accurately described his officially approved relationship with Leung as an FBI asset.

Three years later, another incident came perilously close to derailing
PARLOR MAID
. A supervisor at FBI headquarters had become wary of Leung's reporting and all that money the bureau was paying her. He suspected that she had been turned and doubled back against the United States.

The supervisor assigned an FBI analyst to do an in-depth review of Leung's file. The analyst discovered that Leung had not been polygraphed in ten years, and drafted a message to Los Angeles ordering that she be given a lie detector test.

But the supervisor thought that headquarters could not compel the field to act unless required by the rules. He softened the language of the message simply to suggest that Los Angeles consider polygraphing
PARLOR MAID
. Since it was only a suggestion, J.J. was able to ignore it.

The ponderous FBI bureaucracy overlooked the series of red flags that might have unmasked
PARLOR MAID
more than a decade before she was finally caught. For example, the headquarters supervisor who believed Leung had been doubled back against the United States was transferred before the review of her file was completed.

The constant turnover of FBI managers meant that no one was really looking at J.J. and Leung. Between 1990 and 1996, when the series of danger signals came in rapid succession, there were four different supervisors at headquarters and three different supervisors of the China squad in Los Angeles, all responsible for
PARLOR MAID
. As a result, J.J. was the only FBI agent who knew the complete history of the
PARLOR MAID
operation. And because of his standing and Leung's accepted value as a prime bureau asset, nothing came of the various clues that raised questions about her.

In October 1996 Dot Kelly left Los Angeles and J.J. succeeded her as the supervisor of the China squad. Normally, a counterintelligence agent who becomes a manager would not continue to handle a source. But such was J.J.'s prestige that an exception was made in his case. He was permitted to continue to run
PARLOR MAID
.

For the next three years, J.J. supervised the field office's work in
CAMPCON
, the FBI investigation of alleged Chinese involvement in the 1996 presidential campaign of Bill Clinton. Leung became a principal source for J.J. in the campaign-contribution inquiry.

That same year, Johnny Chung, a California businessman, met in Hong Kong with General Ji Shengde, the head of Chinese military intelligence. The general, using an alias, appeared from the shadows at the kitchen entrance of an abalone restaurant. The spy chief, Chung later testified to a House committee, sent him $300,000 and said he hoped that the money would be given to help elect President Clinton. Some $35,000 of the total did find its way into the campaign. "We really like your President," General Ji said, according to Chung.

It was explosive testimony and put Johnny Chung at the center of the congressional and Justice Department investigations into Chinese influence in the Clinton presidential campaign. It was J.J. Smith who questioned Chung for the FBI.

J.J. then guarded Chung when he received mysterious death threats from a California man who suggested that Chung would live considerably longer if he refrained from talking any more. Among other issues that the FBI was later forced to reexamine was whether Katrina Leung may have fed misinformation to the bureau in its
CAMPCON
investigation of China's role in the Clinton campaign.

Johnny Chung pleaded guilty in 1998 to bank fraud and other charges in connection with illegal campaign contributions. He was sentenced to five years' probation and three thousand hours of community service. General Ji fared less well;
caught in an embezzlement and bribery scandal reported to involve millions of dollars in guns, luxury cars, and tanker loads of crude oil smuggled into China through the southeastern port of Xiamen, he was initially sentenced to death in 2000, but his punishment was eventually reduced to fifteen years.

Katrina Leung vigorously and publicly defended her friend Ted Sioeng, another figure involved in the campaign-contribution investigations. The Chinese consulate in Los Angeles had issued the $3,000 check to a hotel owned by Sioeng that, when disclosed by
Newsweek,
nearly blew the cover on the fact that the FBI had bugged the consulate's copying machines. In the 1980s Sioeng, a millionaire Indonesian businessman, won a contract from the Chinese government to sell overseas China's most popular cigarette, Hongtashan, marketed abroad as the Red Pagoda Mountain brand.
Sioeng through his daughter donated $250,000 to the Democratic National Committee, channeling the funds to John Huang, another key figure in the
CAMPCON
investigation.

Sioeng moved to Los Angeles, where he was an influential figure in the Asian community and worked with Leung on a number of local events. He also owned a pro-Beijing Chinese-language newspaper in Monterey Park, the largest Chinese American neighborhood in Los Angeles. A striking figure, with bushy silver muttonchop sideburns, Sioeng sat next to Vice President Al Gore at the notorious Buddhist temple Democratic fundraiser in Hacienda Heights, California, in April 1996.

Both Attorney General Janet Reno and FBI director Louis Freeh told Senate investigators that there was credible intelligence, reportedly gleaned from electronic intercepts, linking Sioeng to an effort by the Chinese government to influence US elections through campaign contributions. Sioeng denied that he or his family had ever acted as agents of the Chinese government. Leung, in an interview with the
Los Angeles Times
in 1997, called the reports about Sioeng "nonsense."

"If China needed a good agent,
why would it turn to someone who doesn't know the United States and doesn't speak English well?" she asked. In retrospect, her comment was ironic. At the very time she derided reports that Sioeng was a Chinese agent, she herself was passing FBI secrets to the MSS.

In the late 1990s the FBI discovered that some of its operations had been compromised and several assets originally recruited by the bureau had been seized and interrogated in China.
Typically, the FBI does not operate assets abroad; that is primarily the job of the CIA, known by FBI counterintelligence agents as "the cousins." When the FBI recruits an intelligence asset, a student or businessperson, for example, if the recruit returns to China he or she normally would be handed off to the CIA. After the compromises and problems inside China were discovered, a special counterintelligence task force was formed to investigate what happened. The task force was to look at Leung's file as part of its review.

Then, in the spring of 2000, an informant run by the San Francisco field office who was a double agent for the FBI and Chinese intelligence reported that Leung was working for a PRC spy service and had a source inside the FBI.
Although the source inside the FBI was obviously J.J., the section chief at headquarters told him about the report. The informant also claimed that Leung had revealed to the Chinese that he, the informant, was an FBI source.

FBI headquarters ordered the task force to investigate the informant's claims, but the inquiry moved slowly and eventually fizzled out, reaching no conclusions. Then, later in 2000, the same informant reported that Leung was "in bed with" the FBI's LA division.
While it was literally true, J.J.'s superiors at headquarters did not take it that way.

In November 2000 J.J. Smith retired. There was a big turnout of FBI and other intelligence agents, including some from the CIA, at the retirement party, which was held at the upscale Riviera Country Club. But few eyebrows were raised when Katrina Leung, an outsider, showed up, along with J.J.'s wife and son. And hardly anybody seemed to notice when
PARLOR MAID
set up a video camera on a tripod in the back of the room, recording all the speeches and the faces in the crowd.

In December, J.J. received a final accolade. CIA director George Tenet awarded him the National Intelligence Medal of Achievement, capping his thirty-year career in the FBI.

Despite his medal and the retirement celebration, J.J. had a sense of foreboding. The
PARLOR MAID
operation was a dicey business. Dealing as she was with the most powerful leaders of China and its intelligence service, sooner or later there was bound to be trouble. Like a skilled player in a game of Whac-a-Mole, J.J. had managed to knock down the danger signals and questions that kept popping up. But he was out of the bureau now and no longer in control of the operation. It might only be a matter of time before his luck ran out.

Chapter 12

ETHEREAL THRONE: THE SPY WHO NEVER WAS

I
T HAD BEGUN
innocently enough. His laptop was acting up, so Jeffrey V. Wang, an engineer at Raytheon, in El Segundo, California, called the company's tech support. It was August 1999.

The tech who came looked in the computer, fiddled around, and solved the problem. Wang, then a thirty-seven-year-old engineer with the defense contractor, thought no more about it. But soon afterward, he received a telephone call from a woman in Raytheon's security department.

Would Wang mind coming by? There were concerns about something on his laptop and an Air Force investigator would like to talk to him to clear it up.

Wang didn't mind. He worked in Raytheon's airborne radar division on sensitive projects, including the F-15 and F-18 fighter jets and the B-2 stealth bomber. He had both a regular security clearance and a "special access" clearance for even spookier subjects. He knew that the Air Force was always looking over the contractor's shoulder to make sure security was tight.

That was not surprising—Raytheon's Space and Airborne Systems in El Segundo developed not only airborne radars but a variety of sophisticated weapons—electronic warfare systems, scanned array radars, space and missile technology, and intelligence, surveillance, and reconnaissance systems.

Wang met with the Air Force investigator, who flashed his ID and asked Wang to take a polygraph. The lie detector test was supposed to be administered at the Air Force base in El Segundo. But then there was a change: Wang was instructed to go instead to the FBI office on Wilshire Boulevard in Los Angeles. Still unconcerned, Wang was wired up to the polygraph machine. It was turned on and he was asked five questions.

The polygrapher examined the printed readout.

"You're not telling the truth about foreign contacts," Wang was told.

An American, born in Honolulu, Wang could not imagine what the FBI man was talking about. He could not think of any foreign contacts.

The polygraph done, Wang was questioned by Special Agent Gil Cordova. A tall, heavyset man, a bureau veteran, Cordova had been a counterintelligence agent for fourteen years. He worked out of the FBI office in Long Beach, but had come to Los Angeles to interview Wang.

"Be a man," Cordova admonished Wang. He then told him a story. "Once, when I was young, I threw a baseball through a window. At first I denied it. Then I stood up like a man and admitted it."

Wang was unimpressed. Baseballs through a window? It seemed like Interrogation 101. About now, it also dawned on him that the trouble with his laptop had perhaps not been accidental, after all. He suspected the computer had been tampered with; the security issue had been a ruse designed to maneuver him to the FBI office in Los Angeles for questioning. For reasons he could not fathom, he had somehow fallen under suspicion.

It seemed like a script written by Kafka. Wang was upset, and then he remembered: he had a friend in the FBI, in that very building. Denise Woo was a special agent in Los Angeles and a childhood friend of Wang's wife, Diane.

Diane Misumi had been born in Los Angeles of a Japanese American mother and father, both second-generation Americans. During World War II, in the panic after Pearl Harbor, when tens of thousands of Japanese Americans were interned, Diane's mother, Grace, and Denise Woo's mother, Sarah, were both sent off to the "relocation centers." Woo's mother was a Japanese American, and her father was half Chinese.

The two families were close; they had gone on camping trips together, and Jeff Wang's older brother and Denise's younger brother were the same age and good friends from school. From the FBI office, Jeff called his wife, who telephoned Denise Woo.

Jeff had been called in by the FBI, would it be OK if Denise talked to him and tried to help? Denise was sympathetic, and after hearing back from his wife, Jeff called Woo.

She listened to what had happened and asked Wang, "Was there anything that could have triggered the polygraph result?" Nothing Wang could think of. Denise said she would come and see him, since she was in the building.