China's "double spy": the recent arrest of an accused Red Chinese spy and her lover, a former FBI counter-intelligence agent, underscores China's continuing effort to steal our defense secrets. (National Security).

Communist China's penetration of our political, intelligence, and defense establishments did not begin with Bill Clinton's "Chinagate" scandal, and did not end with Clinton's departure from the White House. Nor are Beijing's U.S. political operatives found only in the ranks of the Democratic Party. Witness the case of Katrina Leung.

Mrs. Leung, fluent in both Mandarin and Cantonese, led or worked with numerous Chinese-American civic and business groups in California. She also held a seat on the board of directors for the Los Angeles World Affairs Council, which plays a major role in promoting global citizenship among our nation's political and corporate elite.

Ben Wong, a city councilman from West Covina, told the April 11th Sacramento Bee that Leung could be counted on to organize and emcee receptions for visiting officials or new diplomats from Communist China. Leung organized the April 1999 Los Angeles visit of Red Chinese Premier Zhu Rongji. During a reception for Zhu, then-Los Angeles Mayor Richard Riordan gushed: "We love you. We love your country." Caught up in the rapture of the moment, Riordan declared that he considered it a "great honor to visit a great leader of the world."

For Zhu's reception, Leung had assembled the cream of L.A.'s political and business leadership -- including high-ranking corporate officials from Sun Microsystems and Hughes Electronics, hi-tech companies enjoying lucrative contracts with Beijing. According to an account in the Los Angeles Times, the corporate "friends of China" were dazzled by Zhu's renowned wit, which was on display in his response to a question posed by Los Angeles First Lady Nancy Riordan.

Asked how Beijing planned to celebrate the 50th anniversary of its conquest of China, Zhu replied that there "would be a very grand troop review," and that the troops would carry weapons "developed by China itself, not stolen from the United States." Getting into the spirit of things, Mrs. Riordan suggested that the weapons should be stamped, "Made in China, not the U.S.A." The assembled corporate and political leaders -- some of whom had played a key role in building Beijing's military capacity -- proceeded to enjoy a sarcastic laugh at the expense of less sophisticated Americans still concerned about a potential threat from Communist China.

In addition to organizing events for visiting Chinese officials, Leung accompanied several California business delegations on trade missions to Beijing. She also headed the Los Angeles-Guangzhou Sister City Association. But Leung's most influential work in bringing about a convergence between Beijing and California's business elite was performed behind the scenes. According to affidavits filed in early April by FBI investigators, Leung had been a spy in the service of the People's Republic of China (PRC) since at least 1991.

Double Agent

To be precise, Leung was what the ancient Chinese strategist Sun Tzu called a "double spy." In 1983, Leung was recruited by FBI agent James J. Smith, then-acting director of foreign counterintelligence for the Los Angeles field office, to collect information about PRC officials. At some point, Leung -- code named "Parlor Maid" -- became an intelligence asset for China's Ministry of State Security (MSS), the Communist regime's equivalent of the KGB. In 1988, Leung and Smith -- both of whom were married -- began an affair that would continue, off and on, until December 2002. Both Leung and Smith (who retired in 2000) were arrested on April 9th.

According to an affidavit filed by FBI counterintelligence agent Randall Thomas, a lengthy investigation of Leung and Smith found that, "in 1991, Smith learned Leung was providing classified information to PRC intelligence services without authorization by Smith or the FBI, after which Smith continued to allow Leung access to classified information."

Another FBI counterintelligence agent -- referred to anonymously by Special Agent Thomas, but subsequently identified as William Cleveland Jr. -- was also accused of having a sexual relationship with Leung beginning in 1988, when he was a counterintelligence supervisor in San Francisco until his retirement in 1993; During that period, observed the Sacramento Bee, "Cleveland had security clearances that provided him access to classified information" at the FBI and later at Lawrence Livermore National Laboratory, our nation's most important nuclear weapons facility.

When Cleveland retired from the Bureau, the Livermore Lab hired him to head up its counterintelligence division. Although Cleveland has yet to be charged, he was stripped of his security clearance. He resigned his post at Livermore on April 10th, the day after Leung and Smith were arrested.

According to FBI affidavits, Leung would obtain classified documents from Smith during trysts at Leung's San Marino home. Cleveland allegedly learned of Leung's duplicity in 1991, when he overheard Leung's voice while listening to an intercepted phone call to a Chinese espionage agent -- Leung's MSS handler, known only as "Mao."

After Smith's retirement in 2000, FBI counterintelligence officials who reviewed Leung's performance began suspecting her as a double agent. Bureau investigators confronted Leung in December 2002, after a year of surveillance, including monitoring Leung's phone, fax, and e-mail traffic.

Royal Tourist

As recounted by FBI Special Agent Thomas, a search of Leung's home turned up several very significant items, including "a telephone list relating to an FBI investigation code-named 'Royal Tourist," and "a SECRET FBI memorandum regarding Chinese fugitives dated June 12, 1997."

"Royal Tourist" was the code name for an espionage investigation of Taiwan-born scientist Peter Lee, who pleaded guilty in 1997 to giving Communist China critical secrets relating to advanced anti-submarine radar. As would later be the case with Leung, Peter Lee's suspicious contacts with Beijing, which began in 1985, were allowed to continue for more than a decade before he was arrested. While working at both the Livermore and Los Alamos labs in 1985, Lee provided China with valuable information on the use of laser technology to conduct simulated nuclear explosions.

Notra Trulock, former chief of intelligence for the Department of Energy, points out that Lee "admitted providing information to Chinese nuclear weapons scientists on diagnostic techniques employed by the labs at the Nevada test site. His knowledge of such technologies would be of great benefit to a program intent on developing smaller, lighter nuclear warheads."

Lee was employed by defense contractor TRW at the time of his unauthorized trip to China in 1997. He made that trip as a guest of China's Institute of Applied Physics and Computational Mathematics, the entity that designs Red China's nuclear weapons. Incredibly, when asked by investigators why he would divulge critical defense secrets to China, Lee replied that he wanted to bring China's capabilities "closer to the United States'."

"The Clinton-Gore administration's handling of the Peter Lee spy case was typical of its pro-Beijing policies," reported national security correspondent Bill Gertz in his book The China Threat. "The FBI planned to arrest Lee on November 6, 1997. But the White House put off the arrest. The reason: President Jiang Zemin of China was to visit Washington." Rather than antagonizing Beijing by arresting its spy, Bill Clinton used the occasion of Jiang's Visit to announce the lifting of a ban on U.S. sales of nuclear technology to China. "White House aides were acutely aware of how it would look if the president agreed to sell China nuclear power technology while its spies were stealing U.S. nuclear secrets," Gertz observed.

While Beijing was squeezing concessions out of Democrat Bill Clinton in exchange for Chinese cash, * it was apparently using Republican activist Katrina Leung to keep track of efforts to roll up its spy ring. And Leung, in turn, was making similar use of her paramours, FBI counterintelligence agent Smith and Livermore chief of intelligence Cleveland.

Chung King

Taiwan-born businessman Johnny Chung played a key role in the Chinagate treason and bribery scandal. Visiting the White House at least 49 times between 1994 and 1996, Chung was responsible for funneling hundreds of thousands of dollars from the Chinese military into Bill Clinton's reelection effort.

Chung's most important contact was Lieutenant Colonel Liu Chao-ying of the People's Liberation Army (PLA), managing director of China Aerospace Holdings Ltd. of Hong Kong and a key procurement officer for Red China's ballistic missile program. Through Chung, Liu gained access to a White House fundraiser, where she was photographed with Bill Clinton. This took place, noted the New York Times, at a time when Clinton "was making it easier for American civilian communication satellites to be launched by Chinese rockets, a key issue for the PLA and for Ms. Liu's company, which sells missiles for the military and also has a troubled space subsidiary."

More importantly, Clinton's decisions allowed China to acquire the means to perfect its unreliable missile technology, giving the Communist power the ability to threaten our nation with nuclear weapons. Many of those illegal technology transfers were carried out by Loral Space Technologies and Hughes Communications, firms whose top corporate officers were among the largest donors to the Democratic National Committee during the 1995-96 election cycle.

When Liu met with Clinton, her father, Liu Huaqing, was vice-chairman of Red China's Central Military Commission and a member of the Standing Committee of the Politburo of the Chinese Communist Party. A graduate of the Soviet Union's Voroshilov Naval Academy, Liu Huaqing was, in brief, a member of the six-man oligarchy ruling China. Liu Chao-ying was not only a "princeling" in China's oligarchical system, she was also a high-ranking officer under orders from the Politburo. Thus her illicit donation -- via Johnny Chung -- of $300,000 to the 1996 presidential campaign connected Bill Clinton directly to the Chinese Politburo.

Significantly, when Chung balked at being an intermediary for Beijing, Liu "attempted to reassure Chung by telling him that they already were engaged in similar transactions with others serving as conduits for Chinese funds to support Clinton's re-election," reported the Los Angeles Times in 1998. The names of some of those conduits are familiar: Yah Lin "Charlie" Trie; Ted Sioeng; Maria Hsia; Wang Jun; and scores of others who fled the country after Congress and the FBI began investigating the Chinagate scandal. But one conduit may well have been Katrina Leung, who obtained from Agent Smith the June 12, 1997 secret FBI memo regarding Chinese fugitives.

After pleading guilty to violating campaign laws and admitting that he had funneled tens of thousands of dollars from Chinese military officials into the White House, Chung went into hiding under FBI protection. As Newsday reported on April 12th, agent Smith was "the main FBI contact" for Chung -- a fact that may have placed the informant's life in jeopardy. In early 1998, Chung told the Los Angeles Times of having received a warning that a Chinese hit team had targeted him and his family.

What Good Is the FBI?

The FBI's "Parlor Maid" scandal comes in the wake of the Robert Hanssen spy scandal. Hanssen, a top Bureau counter-espionage official, was arrested in 2001 after spying on behalf of Moscow for more than a decade. The "Parlor Maid" scandal also follows a steady stream of disclosures about the failure of the Bureau's top-echelon leadership to act on warnings issued by field agents regarding the 9-11 plot.

But in addition to illustrating the corruption and incompetence infesting the FBI, "Parlor Maid" also demonstrates that "Chinagate's" tendrils are woven deeply into the top ranks of both major parties -- which may help explain the reluctance of Republican congressional leaders to expose the scandal during Bill Clinton's impeachment trial.

* For detailed information about the "Chinagate" treason and bribery scandal, go to www.thenewamerican.com/focus/cbinagate/.