Saturday, September 26, 2009

Did China’s Spies Penetrate Taiwan Networks?

Defense News


Did China’s Spies Penetrate Taiwan Networks?


TAIPEI — An alleged spy ring has been busted by the U.S. Justice Department, and Taiwanese officials are trying to determine whether its members have compromised a program to modernize its C4ISR network and an agreement that would allow Taiwan-U.S. communications during war.

Tai Shen Kuo, 58, Yu Xin Kang, 33, and Gregg Bergersen, 51, were arrested on espionage charges related to the passage of classified U.S. government information to China, a Feb. 11 Justice Department news release said.

According to court documents, the spying oc­curred from January 2006 to this month. Kuo, a Taiwan-born naturalized U.S. citizen, al­ legedly gathered military information on Bei­jing’s behalf.

According to his 2005 business card, Berg­ersen was the director, C4ISR Programs, Weapons Division, at the U.S. Department of Defense’s Arlington, Va.-based Defense Securi­ty Cooperation Agency. One of his reponsi­bilites was to be the go-between between the United States and Taiwan on C4ISR.

Sources said Bergersen managed negotiations on the Communications and Information Secu­rity Memorandum of Agreement, which allows the United States to release the Type 1 cryp­tography techniques that would be used for U.S.-Taiwan communications during a war.

If true, there are concerns that China now has access to the crypto/keying material/algorithms that could allow Beijing to penetrate Taiwan and U.S. networks.

Kang, a Chinese citizen, allegedly served as a cut-out between Beijing and Kuo.

“Working under the direction of an indi­vidual identified in the complaint affidavit only as ‘PRC Official A,’ Kuo cultivated friendships with Bergersen and others with­in the U.S. government and obtained from them — for ultimate passage to the PRC — sensitive U.S. government information, in­cluding classified national defense informa­tion,” the news release said. “Much of the information pertained to U.S. military sales to Taiwan. Bergersen received undetermined cash payments from Kuo in exchange for information and documents he provided.”

If convicted, Kuo and Kang face life sen­tences and Bergersen 10 years in prison. The FBI surreptitiously copied the hard drive of Kuo’s laptop computer, which showed that Kuo had used PGP Desktop Home 9.5 for Windows to encrypt e-mail and used foreign Internet service providers to avoid surveillance.

One source said Kuo often bragged about his contacts in Taiwan’s Ministry of National Defense (MND) and originally used his con­nection to “his father-in-law, who was a KMT [Nationalist Party] Chinese general during WWII and used this channel to cultivate his contacts in the [Taiwan] defense area.”

Sources in Taipei said Kuo represented him­self as a contract employee from as early as 1997 for SAIC, a leading U.S. systems compa­ny that handles defense modernization ef­forts, intelligence and other contracts.

A source said Kuo, who identified himself as the SAIC representative for Taiwan, had worked on the firm’s efforts to win subcon­tracts for Phase 1 of Taiwan’s C4ISR modern­ization Po Sheng program. Sources and the FBI affidavit also said Kuo was attempting to win subcontracts for Phase 2, scheduled to begin in 2009, perhaps for him personally and not for SAIC.

SAIC was unable to confirm a connection with Kuo, but said it worked “directly on phase one of the Po Sheng program contract supporting the U.S. government and not as a subcontractor to Lockheed Martin. SAIC did not submit a proposal for phase two of the contract,” said Laura Luke, an SAIC vice pres­ident of media relations.

“An initial search of SAIC personnel records indicates Tai Shen-kuo has never been an em­ployee of SAIC,” Luke said. “SAIC has begun an extensive internal review to determine if there was any authorized association with Kuo. SAIC did not submit a proposal for the Taiwan C4ISR modernization Po Sheng pro­gram contract, and the company is not a sub­contractor to Lockheed Martin on this pro­gram. SAIC does support the U.S. govern­ment’s participation in this program through the Foreign Military Sales process.”

One source who knows Kuo said he was an SAIC consultant as of 1997-1998. “SAIC is a huge company, and one part may have no clue what another part does,” the source said. “‘Working for’ implies a full-time employee status. He tended to play up his association with SAIC, perhaps more than was the case.” SAIC won a Foreign Military Sales (FMS) contract in December 2002 for Taiwan’s anti­submarine warfare program. The contract in­cludes software development and systems en­gineering for the Anti-Submarine Warfare Control System Mk 116 program and Com­puter- Aided Dead Reckoning Tracer project.


In a 35-page affidavit submitted as part of the charging documents, an FBI investigator described Kuo’s interest in Po Sheng.

“In 2003, Taiwan implemented its C4ISR program, known as Po Sheng, which trans­lates to ‘Broad Victory.’ Po Sheng is intended to enhance Taiwan’s C4ISR foundational ca­pabilities,” Frances Robb Hourihan said in the affidavit. “Taiwan will purchase a substantial amount of the technology for Po Sheng di­rectly from the United States government through the FMS process. Kuo has taken steps to establish two companies in an effort to obtain sub-contracts for items to be sold to Taiwan for Po Sheng.”

The affadavit said Kuo and Bergersen met March 3, 2007, and talked about Po Sheng and communications security.

“During their conversation, Bergersen re­vealed information about United States and Taiwan communications security, requested that Kuo share the information with Tai­wanese officials, and ask Kuo to arrange a meeting with Taiwan Ministry of Defense of­ficials,” said the affidavit. Of particular concern are questions of whether Bergersen was using Kuo to send messages to Taiwan’s MND to help arrange meetings to accelerate the signing of the CIS­MOA with the United States. Taiwan had been hesitant to sign the agreement for three years. Bergersen also is being accused of giving Kuo access to the 2007 Javits Report, classi­fied secret, which lists potential military and direct commercial sales of military items from the United States to foreign countries.

“Kuo’s handwritten notes are a near-verba­tim copy of portions of the Taiwan section of the 2007 Javits Report, listing the quantity, dollar value, and name of weapons system planned for sale to Taiwan over the next five years,” said the affidavit.

Bergersen also is accused of providing the executive summary, marked secret, on the August 2007 Interoperability Management Board conference.

After an April 7, 2007, meeting in Las Vegas with Bergersen, Kuo sent an e-mail to “Offi­cial A” that said: “bookg [book=documents, g=Greg] didn’t gring gig [DoD’s Global Infor­mation Grid] but he said he will send me as much as he can when he goes back to dc. And he also said will print out the sale of T [Tai­wan] for 5 years.”

In the same message, Kuo listed 10 unclas­sified documents given to him by Bergersen. On April 15, Kuo traveled to Beijing to meet “Official A.”

In a May 15 e-mail sent to Bergersen’s DSCA e-mail address, Kuo reminded him “to bring the gig and taiwan paper,” and “last time you gave me some roadmap ... a lot of stuff blacked out, do you have anything without black out?”

In one of the most damaging conversations recorded by the FBI, Bergersen expresses his concerns for getting caught: “I’d go to jail, I don’t want go to jail.” Kuo responds, “I’d probably go to jail, too [chuckles].”

Then a reference is made to a future busi­ness relationship. Bergersen says, “You know, my friend, if you make me part of, of the own­er ...,” and Kuo says, “I will always steer.”

During the same meeting, Kuo stuffed a half-inch-thick wad of bills, which had a $100 bill on top, into Bergersen’s front shirt pock­et. Kuo later asks “Official A” to send more money, because Kuo “gave a lot this time.”

The question many in Taiwan are now ask­ing: how much damage has been done to the CISMOA and Po Sheng programs? The MND has formed a damage assessment and control task force.

“We are concerned,” said an MND spokesman.