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In Depth

Nation States' Espionage and Counterespionage

An overview of the 2007 Global Economic Espionage Landscape

By Christopher Burgess

Page 12

Mid-November also saw the release of the United States-China Economic Security Review Commission's report to Congress.

In September 2007, the Financial Times reported that in June 2007, the U.S. Department of Defense had been victimized by the most successful cyber attack in history and that the attack was conducted by the Chinese People's Liberation Army.

In July 2007, the Federal Bureau of Investigation's (FBI) director Robert S. Mueller, in testimony before the House Judiciary Committee in response to the committee's inquiry into Chinese activities in the U.S., characterized the threat by saying, "There is substantial concern China is stealing our secrets in an effort to leap ahead in terms of its military technology, but also the economic capability of China. It is a substantial threat that we are addressing in the sense of building our program to address this threat.

Also in July 2007, Thomas Mahlik, the chief of the FBI Domain program, was quoted in a USA Today article as saying the risk was within the enterprise. (Domain is the FBI's defensive counterintelligence program whose stated challenge is "to protect the U.S.'s sensitive information, technologies and thereby competitiveness in an age of globalization.") Mahlik said, "Our message is: There's risk here. You could be giving away the future. The threat's in-house." The article goes on to note that the FBI was pursuing 143 economic espionage cases, compared with 122 in 2006.

In the same article, Joel Brenner, the U.S. national counterintelligence executive, commented on the current state of affairs by saying, "The days when everything that was worth stealing, every secret that was worth stealing in the United States, was a government secret â¬ those days are long done. Much of what makes the country tick, much of our strategic advantage in the world, is economic."

Further evidence of China's activities in the U.S. comes in the form of the arrests, indictments and/or convictions of espionage and intellectual property theft that have occurred in the past 12 months. Consider the following:

In October 2007, U.S. citizen Lee Lan and Chinese national Ge Yuefei allegedly stole chip designs from their employer, Netlogic Microsystems, and other sensitive documents from the Silicon Valley office of Taiwan chip maker TSMC. The two have been charged with trade secret theft, conspiracy and two counts of economic espionage. According to the indictment, the duo were to sell their designs to the Chinese PLA's General Arms Department and the 863 Program, a military-led R&D entity.
In August 2007, Xiaodong Sheldon Meng, a Chinese national with Canadian citizenship, pled guilty in San Jose federal court to one count of economic espionage for trying to sell stolen software to China's Navy Research Center, and one count of violating U.S. arms control regulations for illegally exporting software used to train military fighter pilots.
In December 2006, Fei Ye and Ming Zhong received guilty verdicts for having stolen microchip blueprints from four different companies (Transmeta Corporation (Transmeta), Sun Microsystems, Inc. (Sun), NEC Electronics Corporation (NEC) and Trident Microsystems, Inc. (Trident) in Silicon Valley, and sharing the aforementioned 863 Program.