FBI FOREIGN COUNTERINTELLIGENCE REVIEW VOLUME XI

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87M00539R000901190016-2
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 56
• Document Creation Date: December 22, 2016
• Document Release Date: July 7, 2010
• Sequence Number: 16
• Publication Date: January 1, 1985
• Content Type: REPORT

Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
Washington, D.C. 20505
Director of Central Intelligence
Central Intelligence Age cy
Honorable William J. Casey
~~e
EX 1. For your information, I am enclosing communications which may be
of interest to you.
2. It will be appreciated if you will have the investigation conducted
as requested in the enclosed memorandum and furnish the results.
3. No further investigation is contemplated with regard to this matter.
4. You will be advised of the pertinent developments in connection
with this inquiry.
5. Please note change in caption of this case.
Director
Federal Bureau of Investigation
Enc. ( 1
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
SECRET
U.S. Department of Justice , 9 3S
Federal Bureau of Investigation
FBI
Foreign
Counterintelligence
Review
Volume XI
SECRET -"D 7
F
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2 BI/DOJ
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
Security Precautions
Warning Notice Sensitive Intelligence Sources
and Methods Involved
National Security Unauthorized Disclosure
Information Subject to Criminal Sanctions
Dissemination and Extraction of
Information Controlled by Originator
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
This corrrnunication is classified "Secret/Orcon" in its entirety.
Classified by 859
Declassify on: OADR
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2 __
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
I. HOIS PRESENCE AND OPERATIONS IN THE
UNITED STATES I
Union of Soviet Socialist Republics 1
GRU Operations 3
Active Measures 4
People's Republic of China 5
Poland 9
German Democratic Republic (GER) 11
Hungary 13
Taiwan 14
Cuba 17
Nicaragua 19
South Africa 21
II. DEVELOPMENTS IN (DUNTERINTELLIGENCE
OPERATIONS 23
Thomas Patrick Cavanagh 23
Alice Michelson 27
Ernst Ludwig Forbrich: Neutralization
of an EGIS Agent 29
James Durward Harper, Jr.: Arrest
and Conviction of a PIS Agent 34
SECR ET
- i -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
INTRODUCTION
The purpose of this publication is to provide, on a
semiannual basis, an overview and analysis of hostile intelligence
service (HOIS) activities in the United States, including presence,
operational trends, collection targets, and modus operandi.
Detailing and analysis of key FBI counterintelligence operations is
also afforded. In the interest of operational and administrative
security and acknowledging the need-to-know principle, information
is not set forth in specific, detailed documented form. Comments
and queries regarding this publication are welcome and may be
addressed to FBIHQ, Intelligence Division, Attention: T. J. Dillon,
CI-3 Section, B Unit.
- Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
1. HOIS PR ESENCE AND OPERATIONS
IN THE UNITED STATES
Union of Soviet Socialist Republics
The Soviet intelligence services (SIS) present the most
serious espionage threat to the United States. The manpower and
resources devoted to intelligence operations against the
United States far exceed the effort of other hostile intelligence
services. As of June, 1985, 1,410 officials were stationed in the
United States. It is estimated that approximately 35 percent of
these officials are Soviet intelligence officers (IOs) or co-opted
agents.
During the period of this review, the KGB tasked line PR
(political intelligence) to be more vigilant in its efforts to report
indications that the United States is considering the use of military
force in any area of the world, to report on unanticipated meetings
by high-level U. S. Government officials, troop movements that are
out of the ordinary, and medical-related activities by U. S. Armed
Forces which may reflect a preparation for combat.
Political intelligence collection continues to focus upon
the Reagan administration's plans and intentions regarding the Third
World, including use of American forces in these areas of the world.
Other political intelligence priorities are the Geneva disarmament
talks of January, 1985, and any intelligence regarding foreign policy
issues relating to military and strategic matters.
The KGB continues to target sources of economic
information. The areas targeted include domestic issues regarding
the American economy, particularly U. S.-USSR trade relations.
The KGB is also interested in obtaining information on U. S. trade
relations with the Third World.
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2 --
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
A principal objective of Soviet overt and covert
collection is scientific and technical (S & T) intelligence. Most Line
X officers in the United States seem to establish a broad base of
contacts. Among those are official contacts, which are made in
connection with the Soviet's official assignment and considered
useful for obtaining official policy-type information and background
data. Another type of contact is that established in pursuit of
ostensible cover duties and from which, in part, is derived the pool
of contacts from which a Line X officer will spot candidates for
development as agents. Generally, contacts are made by IOs joining
professional associations, attending conferences, or contacting
research organizations or information brokerage firms. Some of the
individual contacts will be further assessed for development. In the
process, the Line X officer will ask them for open-source
information, to perform research, or possibly to obtain restricted
publications.
The expulsion of nearly 150 Soviet officials worldwide in
1983 was directed primarily at those engaged in S & T intelligence
collection. Many of those expelled, including two from the
United States, were KGB Line X officers. These expulsions, even
when coupled with strained U. S. - Soviet relations, do not appear to
have had a significant effect on Line X activities in the
United States. It would seem that there would be a disruptive effect
upon SIS operations when a KGB officer is forced to depart
unexpectedly, since it frequently requires several months to arrange
for a replacement. The FBI has, however, not detected any activity
which might be construed as compensating for the expulsion of an
officer. This may be explained in part by the fact that the broad
S & T requirements can often be satisfied through the acquisition of
unclassified information. Furthermore, targeted material can be
acquired outside the United States under more favorable operating
conditions, or inside the United States by Warsaw Pact intelligence
services.
SECR ET
- 2 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
The SIS continue their efforts to collect information
concerning the organization and personnel of the FBI and other U. S.
Intelligence Community (IC) organizations, with the ultimate
objective of penetrating these organizations.
The KGB also continues its efforts to recruit emigres or
Americans with Soviet ethnic backgrounds. One objective of these
recruitment operations is to penetrate the IC and anti-Soviet emigre
organization. This enables the Soviets to monitor their activities
and ensure the security of Soviet officials in the United States.
GRU Operations
As of June, 1985, approximately 25 percent of known or
suspected SIS officers stationed in the United States were
considered to be affiliated with the GRU. Recent investigations
have revealed two changes in the operations/intentions of these
GRU officers, beginning with a greater degree of caution being
exhibited by the Washington GRU Residency. In two controlled
operations in which classified documents were to be passed, the
GRU principal searched the asset in an obvious attempt to detect
body recorders or transmitters. This action indicates an awareness
of FBI operational techniques by the GRU. It is also known that the
Soviets are interested in purchasing several tape recorder detectors
which are commercially available in the Washington area.
GRU officers have also shown an interest in personal
computers, specifically in computer capability to retrieve
information from other computers and to communicate over
extended distances. The FBI has no evidence of the GR U's current
use of personal computers for either overt or covert intelligence
gathering.
SECR ET
-3-
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
Active Measures
During the first week in July, 1984, allegations surfaced
that the Ku Klux Klan (KKK) had sent a letter to the Olympic
Committee of Zimbabwe, threatening violence against its Olympic
teams. Shortly thereafter, similar letters containing threats, racist,
and derogatory language were received by other African and Asian
countries. Countries known to have received the letters are Ghana,
Mali, Cameroon, Senegal, Uganda, Nigeria, Zambia, Zimbabwe,
Liberia, Sri Lanka, Bangladesh, Hong Kong, Malaysia, South Korea,
Philippines, Burma, Japan, Singapore, and the People's Republic of
China (PR C).
Based upon investigation and analysis of the letters, it
has been concluded that they fit the pattern of other Soviet forgery
operations and were part of the overall Soviet active measures
campaign to discredit the Reagan administration and its handling of
U. S.-Soviet relations.
Top-level leaders of the different factions of the KKK
were interviewed by the FBI. They categorically denied any
knowledge of the letters and pointed out many discrepancies in the
logo appearing on the letters.
The words and phrases used in the purported Klan letters
are not colloquial English and are characteristic of nonnative use of
the English language. In addition, the timing of the mailing of the
letters to coincide with the visit of Secretary of State Shultz to
Malaysia is indicative of a desire to make the most of these
circumstances for propaganda purposes. During this visit, Tass
published an article saying that the KKK has "expressed in an
extremely base manner what the architects of American Policy have
in their mind." The article said that the Reagan administration "has
mounted such ferociously anti-socialist activities as has made
participation of sportsmen from Socialist countries in the Los
Angeles Olympics impossible."
SECRET
- 4 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
It is clear that the news release was part of a
preconceived plan on the part of the Soviets to immediately
publicize material that would support their decision to boycott the
Olympics and imply that the letters are in some way connected with
President R eagan's foreign policy.
People's Republic of China
Since the publication of the last issue of the Review, the
PR C has again increased its manpower resources in the
United States. The Chinese diplomatic and official complement has
risen to some 1,252 individuals at the PR C's five diplomatic
establishments and 40 offices, the latter group representing the
interests of PR C trading corporations or government agencies. Of
this number, 82 are considered known or suspected officers of the
PR C Intelligence Services (PR CIS), some posted to the
nondiplomatic offices. The Chinese student/scholar population in
the United States now numbers more than 13,000; and delegation
traffic, which has grown markedly each year in the recent past, rose
sharply again in 1984, with more than 10,500 individuals arriving in
more than 2,700 delegations.
For some time it has been reported that the PR C will
supplement its consulates in New York City, Houston, and San
Francisco with the opening of consulates in Chicago and Honolulu;
and reporting now is that the Chicago consulate will open in
September, 1985, with a Honolulu consulate scheduled to open
sometime in 1986. Although the opening of these new establishments
is part of a reciprocity agreement also giving the United States two
new consulates in China, the PR C has a history of cutting corners in
this area. For example, until the opening of the New York City
consulate, the PR C Mission to the United Nations openly provided
consular services, although these activities were clearly beyond the
SECRET
- 5 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
diplomatic charter of the establishment. Another example of this is
the San Francisco Consulate's leasing of a residence in Los Angeles.
Ostensibly to house PR C students in the area, this location is staffed
by officials from the San Francisco Consulate and is reputed among
the Chinese-American community of Los Angeles to be the PR C's
"consulate" for Southern California.
Paralleling this development has been a recent tendency
for some of the working sections of PR C diplomatic establishments
to seek to establish office quarters outside of their current
diplomatic facilities. An example of this was seen when the
Cultural Affairs Section of the PR C Embassy tried to purchase its
own building in Washington, D.C. When the United States
Department of State (USDS) learned of this, the purchase was
blocked, since the U.S. Embassy in Beijing does not have the same
freedom to expand its operations outside its current quarters. The
PR C's response to this USDS move was to attempt to have a trusted
Chinese-American contact purchase the desired building and then
lease it back to the PR C Embassy. The Educational Affairs Section
of the PR C Embassy is now also looking for its own outside space, as
is the Educational Affairs Section of the San Francisco Consulate.
Although, as noted above, only five to ten percent of the
PR C diplomats and officials in the United States have been
identified as affiliated with the PR CIS, it should not be assumed
that the level of Chinese intelligence activity in the United States
corresponds to the level of PR CIS staffing of Chinese
establishments. The intelligence activities of these IOs are
complemented in the United States by the intelligence activities of
Chinese visitors, students, and delegations. Although a number of
FBI investigations have documented the fact that PR CIS officers
under diplomatic or official cover do handle certain intelligence
operations, other investigations have indicated that those same
officers play, at most, a supporting role in other PR C intelligence
operations in the United States.
SECRET
- 6 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
The FBI has concluded that one of the major roles of
PR CIS officers is to identify, assess, and befriend Chinese-
Americans of intelligence interest to the PR C. These potential
agents are encouraged to travel to China, where they are further
assessed and cultivated by other PR C officials. If all goes well with
a given Chinese-American of interest, his name is placed on one of a
number of lists maintained by PR CIS officers at the Chinese
diplomatic establishment nearest his home. When a visiting PR C
delegation or a Chinese exchange student visits the establishment
and tells PR CIS officers there of an intelligence requirement, the
officers will check their lists and refer the visitor to an appropriate
Chinese-American deemed to be cooperative. Though PR CIS
officers do at times assist a visitor who has acquired a sensitive
item by shipping it back to the PR C in the diplomatic mails,
investigations indicate that it is up to the visitor to devise his own
method of acquiring the needed item or information from the
targeted Chinese-American. PR CIS officers stationed in the United
States thus assist, but do not direct or control many of the PR C's
clandestine intelligence efforts in the United States.
SECR ET
- 7 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2 --
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
Cases in this vein have also revealed that PR CIS have
instituted a program in which Intelligence Officers working against
the United States are sent out of China as members of visiting
delegations. The trips seem to be familiarization tours, and it is not
clear that the officers making them have operational missions while
travelling in the United States.
SECRET
-8-
----r- Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2 -
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
Poland
The Polish Intelligence and Security Service (SB) and the
Military Service (Z-II) continue to operate aggressively in the
United States. The primary targets of the Polish services are the
collection of S & T information and economic intelligence. The
former is a traditional target of the Poles; the latter has received
increased emphasis in the last two years due to Poland's ongoing
financial crisis.
The James Durward Harper, Jr., espionage case clearly
illustrated the PIS emphasis on the acquisition of S & T information.
Harper, a U. S. citizen, passed highly sensitive U. S. defense secrets
to the Poles at various locations in Europe and Mexico from 1979 to
1981. Included in the compromised material were documents relating
to the ballistic missile research and development programs of the
United States. For his services, Harper was paid approximately
$250,000 by the Poles. On May 14, 1984, Harper was sentenced to
life imprisonment on charges of espionage.
Polish intelligence also tasks Polish students studying in
the United States to collect S & T information relative to their
fields of study. Another frequently used collection tool of the PIS is
Polish emigres who represent one of the largest ethnic groups in the
United States.
Economic intelligence has been sought by the Poles in
regard to the lowering of import/export controls and the full
reinstitution of Polish Airlines (LOT) air travel to the United States.
In recent months, the Poles have increased their activities to gather
information concerning the possibility of Poland's membership in the
International Monetary Fund.
SECRET
- 9 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
As of June, 1985, there were 355 Polish officials in the
United States, the largest presence (aside from the USSR) of the
Warsaw Pact countries. Of this number, approximately one-fourth
are known or suspected IOs. In addition, there are currently 933
students and 1,015 visitors, any of whom may be tasked for
information on political, economic and S & T information in the
United States.
Polish intelligence personnel and cooptees have been
identified through the FBI investigative program Polinex (Polish
Solidarity Expellees). Interviews of many of these former members
of Solidarity have substantiated they were pressured by Polish
intelligence to sign letters of cooperation in return for their release
from internment and a passport to travel to the West.
Another base for Polish intelligence operations in the
United States is the commercial cover organizations. One of the
most prominent of these organizations is the Toolmex Corporation
located in Natick, Massachusetts. Toolmex is a wholly owned
subsidiary of Metalexport in Warsaw, Poland. The current president
and vice president of Toolmex are suspected Polish IOs. It is
interesting to note that Toolmex has taken over all of the corporate
functions of the now defunct Polish American Machine Company
(POLAMCO). Convicted Polish spy Marian W. Zacharski was the
former executive officer of POLAMCO.
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
German Democratic Republic (GDR)
As of June, 1985, there were 107 East German officials
stationed in the United States. Approximately one-half are
considered to be K & S intelligence officers of the East German
intelligence services (EGIS).
As noted in the past few issues of the Review, the East
Germans have developed an increasingly diversified approach to
intelligence collection. It has become apparent that East German
diplomatic establishments are being utilized for S & T collection and
other intelligence-related activities. GDR officials stationed in the
United States have been making increased contacts with U. S.
Government employees, U. S. congressional staff members,
businessmen, and students. In such contacts, economic and political
intelligence relative to the United States, generally available in
In particular, the EGIS have shown
an interest in any economic information relating to the lowering of
import duties placed on East German products shipped to the United
States.
The East Germans have recently stepped up the
collection of military-related and other sensitive information. In
recent cases, the EGIS targeted such items as antisubmarine warfare
(ASW) technology, cruise missile technology, and U. S. Army
antiaircraft missiles. And, two ongoing cases demonstrate EGIS
interest in penetrating sensitive installations. In one case, a GDR
agent has been targeted against a nuclear laboratory, and in another
case an agent has been tasked to furnish information on a classified
center for aerospace research.
__ Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
Augmenting the EGIS effort have been the activities of
three commercial firms recently established by the GDR in
New York City. The firms are initiating business transactions with
U. S. companies of interest to the EGIS, and collecting targeted
S & T information. Such data are obtained overtly from professional
engineering and technical societies which publish material on such
topics as industrial trends, market analysis, and production
application.
GDR visitors to the United States have increased
substantially in recent years, and they too have been used in an
intelligence-related capacity. The FBI estimates that virtually all
GDR scientists, economists, and trade representatives are tasked to
perform some sort of intelligence-related missions, including
collection, spotting, and serving as couriers. Exemplifying this was
German scientist Alfred Zehe, who served as a handler of an East
German agent, in reality an FBI double agent. Zehe was arrested by
the FBI in October, 1983, and pled guilty to charges of espionage. In
April, 1985, he was sentenced to 8 years in prison, and on June 11,
1985, he was returned to the Eastern Bloc in a prisoner exchange.
As with the Soviets, the East Germans have adopted the
practice of establishing front companies for the purpose of acquiring
advanced U. S. technology, including items that are embargoed from
export to the Eastern Bloc. Investigations revealed that several of
these firms are operated by West Germans. There are also
indications that some of these firms may receive backing from the
SIS, as well as the EGIS.
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2 _T___
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
Hungary
As of June, 1985, there were a total of 111 Hungarian
officials stationed in the United States. Of this overall total,
roughly one-quarter of the officials are considered to be K & S IOs
of the Hungarian intelligence services (HIS). Over the past several
years, the number of Hungarian officials and K & S IOs assigned to
the United States has remained relatively stable.
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
Taiwan
Taiwan is represented in the United States by the
Coordination Council for North American Affairs (CCNAA), a semi-
diplomatic entity having responsibilities similar to those carried out
by foreign embassies and consulates. There are now ten CCNAA
establishments in the United States located in Atlanta, Boston,
Chicago, Houston, New York, Los Angeles, Honolulu, Seattle, and
San Francisco; the Special Representatives Office (SRO) is located
in the CCNAA establishment in Bethesda, Maryland. The Taiwanese
are planning to open a further establishment in Kansas City,
Missouri.
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
It is significant to note, however, that the TIS, during the
past few years, have broadened their collection objectives to include
intensified targeting of S & T and military-related material.
Perhaps the most significant targets of this nature have been ASW
technology and missile and radar-related technology. Targeted
material of this nature includes, specifically, guidance technology,
missile software and hardware, missile design computer programs,
gyros and actuators, and the Tomahawk cruise missile.
The activities of the TIS in the United States came to
the forefront as a result of the murder of Henry Y. Liu on
October 15, 1984, in Daly City, California.
Liu's skill was
such that he came to be successful in manipulating the TIS into
believing that he was acting as their agent against the PR C and
leading the PR C to believe that he was acting as an agent of the
PR C.
Within a month of the murder, FBI investigations had
developed five suspects all of whom belonged to the Taiwan-based
United Bamboo gang. Further investigation revealed that officers of
the IBMND had been in contact with United Bamboo and had tasked
gang members to murder Liu, since the IBMND had received
information that Liu was working for the PR C.
Eventually, the Government of Taiwan arrested three
members of the IBMND for complicity in the murder plot, all of
whom were tried and convicted on charges of murder. Two members
of the United Bamboo gang were also arrested, tried and convicted
by the Taiwanese.
Although the Taiwanese Government denied any
involvement in the murder of Liu, the incident has become a cause
celebre, and has spurred protests from members of the United States
Congress and the Chinese-American community.
SECR ET
- 16 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
Government of Cuba (GOC) officials assigned to the
United States, including working wives, total 129. Roughly 30-35
percent of these officials are known or suspected of Cuban
intelligence services (CuIS) affiliation.
Since the October, 1983, U. S. military action in Grenada,
the CuIS, reflecting the intensified concern of the Cuban political
leadership, has displayed an increased interest in gathering
information on the disposition and readiness of U. S. military forces.
Current reporting indicates that the Cuban leadership believes U. S.
military action against either Nicaragua or Cuba is possible.
Consequently, the Cubans have tasked their agents to obtain
information on U.S. troop movements and concentrations. Almost
all DAs who are in contact with the Cubans have been tasked to, at
a minimum, remain alert for signs of U.S. military activity which
could signal an invasion of Cuba or Nicaragua. Additionally, Cuban
IOs assigned in the United States under diplomatic cover continue to
lobby members of the U.S. Congress, press and academic community
to oppose the U.S. military build-up of the Reagan administration.
The CuIS generally attempts to recruit individuals who
have family ties to Cuba and induce their cooperation either through
threats of hostage situations (or by promise of preferential
treatment for family members), or by invitations to return to Cuba
to personally experience the success of the Revolution, thereby
appealing to the individual's sense of nationalistic pride.
SECR ET
- 17 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
Cuban IOs operating under diplomatic cover in the
United States are in frequent contact with a wide range of U. S.
citizens, mainly to lobby against the current U. S. military build-up
and the continuation of the U. S. trade embargo against Cuba. Their
contacts include Cuban exile groups, members of Congress,
Congressional staff members, the media, student organizations,
businessmen, and state and local political leaders. Some of these
contacts have visited Cuba at the invitation of the Cuban
Government, where they have been the recipients of the Cuban
public relations campaign designed to foster a pro-Cuban attitude.
Although the current major objective of the CuIS is
collection of information on U. S. military disposition and readiness,
other objectives remain--the collection of information on anti-
Castro exile groups and emphasis on issues surrounding the trade
embargo and efforts to repeal same. Objectives, such as penetrating
the FBI and CIA, and the collection of some U. S. technology, will
probably continue.
The CuIS has been generally effective in achieving its
objectives. It has established an extensive network of agents within
the Cuban immigrant population. Furthermore, Cuban IOs have met
with a degree of success in the projecting of a positive image of
their revolution to the American people.
Source reporting suggests that a number of high-level
Cuban officials are becoming disenchanted with Castro and the
GOC. This disenchantment may be based upon the belief by Cuban
officials that the Cuban Revolution has failed and that a bleak
future is in store for Cuba under communism. Disenchantment with
and a loss of personal loyalty to Castro suggest that an overall
softening of the Cuban target may be taking place, and in the coming
years the CuIS may become more vulnerable to penetration by U.S.
counterintelligence services.
SECRET
- 18 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
Nicaragua
Nicaragua is represented officially in the United States
by the Nicaraguan Mission to the United Nations, the Permanent
Mission of Nicaragua to the Organization of American States, and
the Nicaraguan Embassy. Nicaragua currently has approximately 60
officials assigned to these establishments. Approximately ten
percent are considered K & S IOs.
The Nicaraguan intelligence services (NIS) in the
United States attempt to:
-- gather information on the anti-Sandinista
exile population;
- collect information on U. S. Government policies
vis-a-vis Nicaragua and Central America;
and,
- project a positive image of the Sandinista
revolution to the American people.
Shortly after the Somoza Government was overthrown in
1979, the Nicaraguan Government of National Reconstruction (GR N)
utilized the pro-Sandinista organization "La Brigada" as an
intelligence network. A source of unknown reliability advised during
May, 1980, that the goal of "La Brigada" was to quash any opposition
to the Sandinista regime. At that time, "La Brigada" dispatched new
operatives to the United States. This new group was largely
composed of Sandinistas, Chileans, and Cubans.
SECRET
- 19 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2 -
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
Since the closure of most Nicaraguan Consulates in June,
1983, the NIS appear to be utilizing the Nicaraguan solidarity groups
more extensively. The group most frequently used is the National
Network in Solidarity with the Nicaraguan people. This group is
funded in part by contributions from approximately 60 local groups,
churches, and public foundations. They are active on university
campuses and are supported by individual contributions and
foundation grants.
Available information indicates that there may be
cooperation between the Cubans and the Nicaraguans concerning the
use of the Nicaraguan solidarity groups. It is known, for example,
that the Casa de las Americas (CDLA), a social club organized by
Cuban exiles and frequented by officials of the GOC assigned to the
CMUN, have distributed leaflets advertising a walk against the
United States involvement in El Salvador and Central America.
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
South Africa
The Government of South Africa has directed its
intelligence services to conduct intelligence activities throughout
the world. The South African intelligence services that operate in
the United States include the South African National Intelligence
Service (SANIS) and the South African Department of Military
Intelligence (SADMI). These services are operative within the South
African Mission to the United Nations in New York, the South
African Embassy in Washington, D.C., and all five South African
consulates in the United States. The South African Security Police
(SASP) is also known to operate clandestinely in the United States.
Additionally, some South African media representatives in the
United States have been identified as intelligence personnel.
The SANIS continues to target U.S. Government
organizations and those organizations which support black
nationalism within South Africa and/or actively oppose South
Africa's policy of apartheid. SADMI targeting is directed toward
military information of benefit to South Africa's armed forces.
During 1984, SADMI increased its efforts to obtain information on
high technology weaponry and nuclear-related technology. SADMI is
also involved in the legal and illegal purchase and export of military
equipment.
Current statistics indicate a presence of 198 South
African officials in the United States, among whom roughly 15
percent are considered to be K & S IOs.
SECRET
- 21 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
SECRET
- 22 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
The vehicle driven by subject was registered to Thomas
Patrick Cavanagh, born March 1, 1947, in Northridge, California. It
was determined that Cavanagh was employed as an engineer by the
Northrop Corporation, a major defense contractor. He held a
"Secret" security clearance with special access and was then being
processed for a Top Secret clearance.
SECR ET
- 24 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
UCAs learned during the course of the interview that
Cavanagh was armed with a loaded, 45-caliber automatic pistol.
During the course of conversations and the transmittal of the
$25,000, one of the UCAs was able to gain possession of the weapon.
A previously arranged signal to monitoring SAs outside the hotel
room resulted in their entry while the UCA was in possession of the
weapon, and Cavanagh was arrested without incident.
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2 ---
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
USAF and Northrop personnel have reviewed documents
provided by Cavanagh to the UCAs during the meeting
December 12, 1984, and have noted
The case was presented to a grand jury on December 27,
1984, and they returned a three-count indictment for espionage.
Cavanagh pleaded guilty on March 14 and on May 23, 1985, he was
sentenced to serve two concurrent life sentences.
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
Alice Michelson
On September 15, 1984, the asset traveled to Mexico City
and met at the Soviet Embassy with two Soviets, one of whom is a
known 10. The KGB directed the asset to make telephonic contact
on September 20, 1984, with a woman identified by the KGB as Alice
Michelson at a number in New York City. The KGB officer provided
the asset with a photograph of Alice Michelson and instructed the
asset to arrange a meeting prior to September 29, 1984, inasmuch as
Michelson would be departing the country thereafter. The purpose
of the meeting was to practice exchanging information using
concealment devices given to the asset by the KGB. During the
meeting on September 15, 1984, the KGB officer also provided the
asset with a miniaturized tape recorder and instructed him to either
read aloud into the recorder directly from classified documents or to
dictate classified information into the recorder from memory. The
KGB further instructed the asset to then place the tape into a
concealment device (a false cigarette pack) supplied by the KGB and
pass the device to Michelson.
SECR ET
- 27 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
On September 20, 1984, the asset made a phone call to
Michelson using the telephone number he was given, and tentative
plans were set to meet at the Baltimore-Washington International
Airport on September 29, 1984, at 2 p.m. Before the plans could be
finalized, Alice Michelson advised the asset she would have to check
with her "people" and call the asset back on September 24, 1984. On
the night of the 24th she called and confirmed the meeting plans.
On September 29, 1984, the asset and Alice Michelson
met at the Baltimore-Washington International Airport, and the
asset gave Michelson a pack of Marlboro cigarettes containing a
hollowed section in which classified U. S. information was stored in
tape form. Michelson voluntarily accepted the pack with the
information.
Michelson then attempted to leave the United States on
October 1, 1984, aboard an aircraft of the Czechoslovak Airlines. As
she prepared to board a flight destined for Prague and East Berlin,
she was questioned by U. S. Customs officials, who were aware of
the FBI's interest in Michelson. Having located the cigarette pack
and two tapes, she was detained by Customs officials and
subsequently transported to the offices of U. S. Customs where she
was turned over to the FBI and placed under arrest.
During interview, Michelson stated that she was born on
November 12, 1916 in Berlin. Michelson described herself as a retired
teacher who had concentrated on the English language. When
questioned about intelligence-related activities, Michelson claimed
innocence, stating that she had been asked as a favor to a person in
East Germany, to contact a person in Maryland and bring back a
package which he would give to her. Michelson was subsequently
indicted for violation of the espionage statutes and held, awaiting
trial. She eventually pleaded guilty, was sentenced to ten years in
prison, and then returned to the Eastern Bloc in a prisoner exchange.
SECR ET
- 28 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
Ernst Ludwig Forbrich: Neutralization of an EGIS Agent
On June 29, 1984, Ernst Ludwig Forbrich, an agent of the
EGIS, was convicted of espionage, and on August 3, 1984, he was
sentenced to 15 years in prison. Forbrich had been arrested on
March 19, 1984, after selling classified documents for $550 to a
UCA. The Forbrich investigation also spawned the arrest in West
Germany of Michael Cameron, a U.S. citizen, on charges of
espionage, and also led to investigations (some of which are still
ongoing) of several other individuals.
The investigation was initiated in July, 1982, when the
estranged wife of a former U. S. Army major reported to the Tampa
Field Office of the FBI that her husband had sold military secrets to
the East Germans while he was serving in the Federal Republic of
Germany (FR G). The period during which he sold the documents
occurred during the 1970s. The woman reported that Ernst Forbrich,
a citizen of the FRG and an operator of an auto repair facility,
served as a conduit through which the documents were passed to the
EGIS.
In the course of an interview, the woman stated that her
husband's activities first came to her attention in June, 1980, during
a visit by "John" (Forbrich), who had been a friend of the major since
the 1970s. While her husband and John were having a secretive
meeting in a bedroom (she noted that such meetings were
commonplace in the course of the relationship which extended back
several years, between John and her husband), she decided to
interrupt the exchange. On a bed were numerous documents,
official in appearance, which John was photographing with a small
camera. Her husband became outraged and demanded that she leave
the room.
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
After John's departure, the major explained that the
German was a "garbageman" who collected random pieces of
information for sale in East Germany. The husband stated that the
documents sold were actually concocted by him and of no value.
But, based upon what she had seen of the numerous documents her
husband had stored in their homes over the years, she surmised that
the material sold to John was genuine. He also explained that John
had been a captain and was now a lieutenant colonel--she presumed
this meant that John was a member of the EGIS.
During the interview with the FBI, the woman recounted
other suspicious activities on the part of John and her husband.
Several years ago, while the couple was still in West Germany, John
had given a small camera to her husband which was similar to that
used by John during his visit. Further, during another visit to the
couple in 1980, John stated that he wished to visit the Pentagon (at
that time the woman was employed by the Department of Defense).
The woman duly brought the German to her office whereupon John,
wearing merely a visitor's pass, became "lost" in the corridors of the
Pentagon for approximately three hours. (Interestingly, relative to
her allegations, the woman failed polygraph examinations.) A
security service of the FR G was then contacted regarding Forbrich,
and the response of the West Germans tended to corroborate the
woman's allegations. As early as 1970, Forbrich had been
investigated by the West Germans for suspected espionage
activities. From that point on the West Germans cooperated in the
FBI investigation of Forbrich.
SECR ET
- 30 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
The major was interviewed in January, 1984 regarding the
allegations of his first wife. He firmly denied any of the charges
and countered by stating that his wife was mentally unstable, had a
profound hatred for him, and wished to wreak vengeance against
him.
Fortuitously, shortly after the interview it was learned
that the major's wife had been contacted by Forbrich, who informed
the woman that he was coming to the United States and wished to
meet with her. Under monitoring by the FBI, a meeting was duly
arranged. At this rendezvous, Forbrich was quite voluble, giving
details of his dealings with the major. He stated that the major had
first sold data in 1971, and over the years had supplied some valuable,
"Top Secret" information to the Germans. The major could have
made much more cash, the German explained, but he was somewhat
lazy in his approach to espionage. Forbrich stated that, currently,
his most valuable agent was a general in the U. S. Army (Forbrich
supplied the name of this individual to the woman). He also
mentioned a sergeant from whom he had obtained documents. The
meeting closed with Forbrich promising the woman up to $100,000 in
cash if she regained employment at the Pentagon and then
cooperated with Forbrich.
Based upon what was learned in this meeting, it was
decided to set up a double agent operation, utilizing the woman,
aimed at luring the German back to the United States and making an
arrest. It was further decided to introduce a UCA into the
operation. The UCA would impersonate a disgruntled "lieutenant
colonel" who had made the acquaintance of the woman and wished to
make some cash by selling classified documents to Forbrich.
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
Through the end of 1983, the woman communicated with
Forbrich by telephone, and mentioned to him that she had a
"present" to deliver to the German. Eventually, in March, 1984,
Forbrich traveled to the United States to meet with the disgruntled
"officer" and obtain his "present." Forbrich met with the UCA in a
motel for a period of roughly two hours. In the course of this
meeting the German, as voluble as ever, stated that he had been an
agent of the EGIS in excess of 15 years. As the meeting closed,
Forbrich paid the UCA $550 for the document and departed the
scene of the meeting, whereupon he was placed under arrest.
There were a number of spinoffs of the Forbrich case.
The one which had the most tangible results was the neutralization
and arrest by West German authorities of Michael Cameron, a U. S.
citizen and civilian employee of the U. S. military, for supplying
military documents to Forbrich. The general, major, and other
military personnel who allegedly supplied documents to Forbrich
admitted being acquainted with the German but strongly denied
compromising any classified data.
The most significant aspect of the case is its degree of
sophistication, which demonstrated once again the high level of skill
of which the Eastern Bloc services are capable. Forbrich operated,
almost without detection, in excess of 15 years, and the precise
number of servicemen compromised by the German will probably
never be known. The modus operandi executed by Forbrich was
SECR ET
- 32 -
--r- Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
quite ingenious. Although an auto garage may seem innocuous, it
could serve as an excellent setting for spotting, assessing, and
recruiting agents. Auto garages, like local taverns, oftentimes take
on the form of a "dub-house," where individuals can socialize. This
is apparently what Forbrich's auto garage was to U. S. servicemen.
Forbrich also provided a service that is needed by virtually
everyone-advice and assistance on automobiles.
The case also demonstrates the potential security
problems caused when hundreds of thousands of American troops,
most poorly paid, are stationed in a foreign setting. It is interesting
to note that, in Forbrich's long career of espionage, few American
servicemen reported his activities.
SECR ET
- 33 -
__ Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2 ---
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
James Durward Harper, Jr.:
Arrest and Conviction of a PIS Agent
On May 14, 1984, James Durward Harper, Jr., a
United States citizen, was sentenced to life imprisonment on
charges of espionage. FBI investigation had discovered that over a
two-and-one-half-year period beginning in 1979, Harper delivered
voluminous classified documents to officers of the PIS in Europe and
Mexico. Included in these documents was extremely sensitive
information relating to the Minuteman missile and the ballistic
missile research and development programs of the United States.
For his services Harper was paid in excess of $250,000 by the PIS.
The Harper case marked the second time within three years that an
American had been arrested for involvement with the PIS for
espionage purposes (William Holden Bell was convicted in 1981 as a
result of his espionage activities with Polish 10 Marian W.
Zacharski).
The FBI learned in March, 1981 that sensitive classified
information concerning the Minuteman missile had been
compromised to the PIS. The information was received from a
confidential source who at that time was a high-ranking officer of
the PIS stationed in Warsaw, Poland. (This fact was disclosed in the
affidavit and subsequent court documents after Harper's arrest and
arraignment; the source has since been exfiltrated successfully from
Poland.) The source also reported that the classified information
was furnished to the PIS by a retired American businessman who had
been introduced to the Poles in Warsaw in October 1979.
SECR ET
- 34 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
According to the source, the introduction of the
American was brokered by an individual named William Bell Hugle.
The FBI had previously investigated Hugle, due to his alleged
involvement in technology transfer sales to the Soviets and Soviet
Bloc countries. After an extensive investigation, it was eventually
decided to proceed with an interview of Hugle. On July 29, 1981,
Hugle was interviewed by the FBI and denied any knowledge of
involvement in the sale of technology to a hostile country.
James Durward Harper, Jr
SECR ET
- 35 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
In October, 1981 a separate but seemingly related
espionage matter came to the attention of the FBI. Through
William Dougherty, an attorney in California, the Central
Intelligence Agency (CIA), the Department of Justice (DOJ), and
then the FBI were approached concerning the sale of classified infor-
mation to the PIS by an unnamed American. The attorney indicated
that one of his "clients" had traveled to Poland and Mexico several
times since 1979 to do business with the PIS. The client was now
hoping to have immunity from prosecution arranged, in exchange for
information he would supply to the U. S. Government on his illegal
activities. The client also offered his services as a double agent.
Ruby Louise Schuler
SECRET
- 36 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
It was apparent that the activities of the attorney's
client resembled those of the unknown American under investigation
by the FBI. Since the granting of immunity from prosecution was
never a viable issue, it became necessary to establish a relationship
with the client through Dougherty to insure a continued dialogue.
This was accomplished by the submission of a list of twenty
questions to the client. The questions were designed to elicit
responses that might help identify the client, determine if the client
was the unknown American, or both.
In February and March of 1982, Dougherty provided his
client's responses to the questions. They were in the form of
detailed but anonymous depositions which Dougherty transcribed
from cassette tapes. The depositions were quite detailed but
frequently rambling in style. Most important, however, based upon
one of the depositions, the FBI was able to identify the client as
being James Harper, Jr., a self-employed electronics engineer who
resided in Mountain View, California. Thus, the first goal of the FBI
investigation had been accomplished with the identification of
Harper.
Further investigation revealed that Harper had
maintained a relationship with Ruby Louise Schuler, who was an
executive secretary to the President of Systems Control
Incorporated (SCI), in Palo Alto, California. SCI is a Government
contract facility which handles defense contracts. While Schuler
was employed at SCI, the company did research for the U. S. Army
Ballistic Missile Defense Advance Technology Center, in Huntsville,
Alabama. In her position, Schuler had routine access to virtually all
of SCI's classified material. Schuler was Harper's access to
classified material at SCI. Their relationship became part romance,
part business.
SECR ET
- 37 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
All the pieces of the investigative puzzle seemed to fit.
Harper was the unknown American/client; through Schuler he had
access to ballistic missile information. For arrest purposes, it was
now necessary to catch Harper flagrante delicto with classified
material, or at least locate documents in his possession.
The FBI's technical coverage provided the answer to this
problem. In a number of telephone conversations at his residence
Harper mentioned that he had a "hutch" where he kept his "stash."
Through repeated use of these words and others in Harper's strange
jargon, it was speculated that the "stash" was a collection of
classified documents that Harper kept for potential future sale.
When he stated during a conversation that he was on his way to the
"hutch," FBI surveillance followed Harper to a commercial storage
space. A later inspection of the storage space by the FBI provided
the missing ingredient. Numerous classified SCI documents were
located there, as well as meticulous diaries that detailed Harper's
travels, meets, and payments in connection with his espionage
activities. Harper was arrested on October 15, 1983, on charges of
espionage.
The principal 10 in the operation was 7dislaw
Przychodzien, a lieutenant colonel in the PIS under the cover of an
official in the Polish Ministry of Machine Industry, Warsaw. As
reported by the confidential source, Przychodzien had been assigned
to the United States in the mid 1970's with the Polish Commercial
Office in New York City. Przychodzien was not unknown to the FBI
- he was the 10 in Warsaw who directed the recruitment of U. S.
citizen and PIS agent William Holden Bell.
SECRET
- 38 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
Despite the involvement of Przychodzien, the Harper
case was not without significant Soviet overtones. The tasking
Harper received from Przychodzien and other Polish IOs was derived
from a master "shopping list" provided by the Soviets. This was
confirmed by the confidential source whose information generated
the Harper investigation. The Harper case is only the most recent
example of the unmistakable cooperation between the intelligence
services of the Warsaw Pact and the Soviet KGB. The Bell case
reflected similar close Soviet/ Polish cooperation.
In conclusion, U. S. army analysts have described the
damage caused by Harper's espionage involvement with the PIS as
"beyond calculation." Mr. John Cunningham, the Acting Director of
Technology for the U. S. Army's Ballistic Missile Defense Project
Office commented that the loss, "...would cause serious damage to
our national defense and would provide Warsaw Pact analysts with a
windfall of intelligence information about the capabilities of our
strategic forces and our present and future plans to defend them."
SECR ET
- 39 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
SECRET
- 40 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
III. DEVELOPMENTS IN HOTS OPER ATIONS
When the People's Republic of China (PR C) first
established a diplomatic presence in the United States in the early
1970s, it immediately began laying the groundwork for exploiting the
intelligence opportunities which direct access to Americans offered.
The FBI in turn, also began to take advantage of the opportunity to
observe Chinese intelligence activities at a rather close range. This
observation revealed early on that the PR C had a particular appetite
for any and all information about one small segment of the U.S.
population: the Chinese-American community.
Over the years, the PR C has expanded its resources in
the United States from one diplomatic establishment and several
dozen individuals to five diplomatic establishments and forty trade
offices, and also more than forty thousand diplomats, officials,
visitors, students, etc. During this period, Chinese clandestine
intelligence operations also grew markedly in both quality and
quantity. FBI investigation of these activities has demonstrated
time and again that these intelligence operations have a single
common element -- they are aimed at developing or exploiting the
intelligence potential of Chinese-Americans. So pervasive has this
phenomenon been, that years of investigation have unearthed only
several PRC covert intelligence operations in which one of the
central figures has been a person of other than Chinese origin.
Furthermore, sources who have attended intelligence planning
meetings run by PR C officials have advised that those officials
usually only ask two questions when discussing how best to obtain a
covert item from a targeted company or department: is there an
ethnic Chinese there? If so, does this person also have any relatives
in the PR C? If the answer to both these questions is affirmative,
then the PR C officials become quite confident of their prospects of
obtaining the desired item.
SECR ET
- 41 -
- Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
Although this near total reliance on the assistance of
Chinese-Americans is a fact of life of PR C intelligence operations,
until recently, the reasons for this unique Chinese approach have
been open to speculation. Not long ago, however, a source was able
to shed some light on how at least one senior PR C official views the
situation. The source's reconstruction of the official's views are
presented below.
In late 1984, information surfaced on a meeting which
was held at a PR C consulate. Present at the meeting were, among
others, two known intelligence officers of the PR CIS, and a
suspected intelligence officer of the PR CIS. During this meeting,
one of the known IOs presented the following overview of Chinese-
Americans and their role in PR C intelligence collection efforts.
The IO said that it is possible to categorize Chinese-
Americans into three groups in terms of their professions or
affiliations: small businessmen, big industrialists, and also engineers
and scientists in key U.S. high technology industries.
Throughout his presentation, the 10 used the names of a
number of Chinese-Americans as specific examples. R egarding
"small businessmen," the 10 noted only that most Chinese-Americans
on the West Coast are middle lass. Regarding "big industrialists,
the IO mentioned a number of prominent Chinese-American
businessmen and gave a brief description of the activities and
influence of each.
SECR ET
- 42 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
When the 10 discussed the scientist and engineer group,
he noted that although these people comprise only a relatively small
component of the U.S. population, they made up a significant
percentage of those involved in critical specialty engineering and
science occupations and observed that these occupations are on the
cutting edge of U.S. Government and private industry high-
technology research. The 10 noted that one-third of all IBM
corporation engineers are Chinese.
The FBI has seen other PR C officials place this
particular statistic at as high as 55 percent. The 10 said that
Chinese engineers and scientists are working in.all aspects of the
U.S. space program. The IO also stated, "no matter whether it is
building a defense satellite or a sensitive defense weapon, Chinese
technical people play an important role. Chinese professors also
teach in famous universities such as the University of California at
Berkeley and Stanford. The importance of them to China is
therefore obvious." The 10 remarked that he believes that there is a
great future potential for these people to become involved with the
PR C, that a long-range plan for them should be developed, and that
a natural consideration will be "the problem of importing them to
the PR C."
The 10 went on to opine that it is also possible to
categorize Chinese-Americans into three groups based on their
degree of emotional ties to the PR C: emigres over 55 years old,
emigres younger than 55, and those raised entirely in the
United States.
SECR ET
- 43 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
The 10 characterized the over-55 group as individuals
who have reached the height of their careers and are ready to retire.
They are willing to make contributions to the PR C. The IO
mentioned as examples several very prominent individuals and then
told the story of one Chinese-American in this age group whose
father had been prosecuted and jailed during the early days of the
PR C regime. Not long ago, the PR C reopened the investigation on
the father and decided that he had been falsely accused. After the
exoneration of his father, the Chinese-American was invited to give
a guest lecture at a Chinese university and accepted the invitation.
The IO also mentioned that several senior Chinese-American
educators who, realizing that they cannot go any higher at their U.S.
universities, have been working to establish and run new universities
in China. Through these enterprises, The IO has urged the P_ RC
Government to go along with them, noting that the PR C can change
the rules later and ultimately take control of the universities.
The IO observed that most of the members of the under-
55 age group are from Taiwan. Most are technically oriented and
work for large U.S. companies. Some have their own businesses with
ties to the PR C. Others are academics who wish to visit the PR C to
lecture at universities. They all desire to establish good relations
with the PR C, but do not want it known openly because of family or
business ties to Taiwan. They are, therefore, vulnerable and
constitute a good source of individuals and companies of use in
furthering PR C scientific development. The 10 gave as an example
of a member of this age group, a Chinese-American who belongs to a
Chinese family association in his home city. This man works for a
large U.S. corporation, which sends him to the PR C frequently.
When in the PR C, the Chinese-American assists an organization near
his ancestral home with its research work.
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
He said that the third group, Chinese-Americans who
were either born in or grew up in the United States, typically speak
no Chinese or at most, a few words of Cantonese and desire to visit
the PR C only for tourism or to see a distant relative. The PR C used
to pay little attention to this group, until a recent favorable
impression of a young Chinese-American engineer sent to the PR C
to work on a difficult problem changed Chinese perceptions.
The 10 said that all three of these age groups are worth
winning over for the PR C. He advocates more effective use of
communications media propaganda but thinks that the most
effective tool would be a letter from relatives in the PR C
encouraging a given individual to travel there.
The 10 also said that he forsees big changes in the PR C's
overseas Chinese work in the United States in the next few years.
He pointed out the need for more money, citing the fact that
Taiwan's Coordination Council for North American Affairs
representatives have more money to operate than do PR C officials.
For example, they receive $130 per diem operating expenses, and
are allowed home leave each year, while PR C officials get $60, and
are allowed home leave every second year, etc.
In conclusion, remarks of the 10 seemed to confirm
previously published FBI assessments of the thrust of intelligence
work being done by the PR C among Chinese-Americans.
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
S EQR ET
- 46 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2 -
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
DISSEMINATION LIST
Assistant to the President
for National Security Affairs - 1
Foreign Intelligence Advisory Board - 2
Department of Justice, The Attorney General - 1;
Office of Legislative Affairs - 1; Counsel for
Intelligence Policy - 1
Department of the Treasury, Director, U.S. Secret
Service - l; Special Assistant for National Security - 1
Department of State, The Secretary of State - 1
Director, Defense Intelligence Agency - 2
Assistant Chief of Staff for Intelligence, U.S. Army - 5
Office of Special Investigations, U.S. Air Force - 5
Director, Naval Investigative Service, U.S. Navy - 1
Director of Central Intelligence - 1
Security Committee/Intelligence Community (IC) Staff - I
Chief, Community Counterintelligence Staff/IC Staff - I
Central Intelligence Agency, Deputy Director for Operations
(DDO) - 1; Office of Communications/DDO - 1;
Policy Coordination Staff/DDO - 2; Chief, Counterintelligence
(CI) Staff - 1; CI Staff (Publications) - 1; Deputy Director
for Intelligence (DDI) - 1; Chief, Collection Requirements
and Evaluation Staff/DDI - 2; Director, Office of
Security - 1; Chief, Security Analysis Group/Office of
Security - I
National Security Agency, Director - 1; M56 - 1; M503 - 1;
Publication Unit - 1
SECR ET
- 47 -
- ,~___- -Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2 ___
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
Chief of Naval Operations, Navy Department, Navy Security
Committee Member - I
Department of Energy - 5
Department of Defense, Director for Counterintelligence
and Security Policy, Office of the Deputy Under Secretary
of Defense - 1
Chief, Security Education Division, Defense Industrial
Security Institute - I
Chief, Security Education Group, Office of Security - I
Director, Division of Security, Nuclear Regulatory
Commission - 1
Director, Office of Security, General Accounting
Office - I
Director, FBI - I
Chairman, House Permanent Select Committee on
Intelligence - I
Chairman, Senate Select Committee on Intelligence - 1
Intelligence and Security Command, U.S. Army - 8
SECR ET
- 48 -
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2 _
 Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2
SECRET
Sanitized Copy Approved for Release 2010/07/07: CIA-RDP87M00539R000901190016-2