American Spies: Espionage against the United States from the Cold War to the Present

23 Spies for China

23 251 Spies for China She’s been a communist since the day she was born. Her bona fides are impeccable. I gradually converted her. She’s now a rock-ribbed Republican. FBI agent JAMES J. SMITH on Katrina Leung, his Chinese spy, cited by Gertz, Enemies, 18 Another Chinese spy case caused the FBI even more embarrassment than Wen Ho Lee. The Wen Ho Lee imbroglio resulted from interagency blunders by the US Department of Energy (DOE), DOJ, and the FBI, but the case of Katrina Leung, code-named “Parlor Maid,” rested solely on the FBI’s doorstep. Leung had been the FBI’s prize Chinese source for eighteen years, until her role as a double agent working for the PRC was exposed. She had not only spied for the Chinese but also carried on longtime romances with not one but two FBI agents. Espionage mixed with romance is a volatile brew that can dilute the objectivity and professionalism of the spy–handler relationship. During the Golden Age of Soviet espionage, the Soviets misread the depth of Elizabeth Bentley’s love for her handler, Jacob Golos, and when the KGB wrested his spy network from her after his death, she turned on her spymasters and betrayed them to the FBI. Another offshoot of “falling in love with an agent” is the handler’s blind rejection of glaring signs that his or her agent may be underperforming, providing inaccurate reports, or, worst of all, working for the other side. Espionage in the New Millennium 252 Such was the case of FBI special agent James J. Smith, Katrina Leung’s handler. Smith, known as “J.J.” among his FBI colleagues, retired from the FBI in 2000 after a distinguished thirty-year career. He spent most of that career in Los Angeles, where he headed the China squad and was widely regarded as the FBI’s leading expert on Chinese espionage. That expertise was enhanced by Smith’s handling of Parlor Maid for eighteen years. Parlor Maid, Leung’s code name, was a top FBI producer of intelligence on China during those years and an adviser on counterintelligence issues as well.1 She was also Smith’s lover throughout the years of their spy–handler relationship and after his retirement. Because of that romance, Leung enjoyed unusual access—Smith consulted her on FBI cases and showed her classified documents on China to seek her assessments of them, a flagrant violation of security regulations and basic spy tradecraft.2 He also brought Leung to FBI parties and she videotaped his retirement reception, a security lapse even an amateur would avoid. Smith first met Leung in 1982, when he interviewed her regarding her activities while working in a company suspected of illegal technology transfer to China.3 Leung talked freely about her contacts back in Beijing and shared a wealth of useful information. Leung demonstrated potential to be a long-term oasis in the desert of US intelligence on China—she was young, vivacious, socially skilled, and well connected in China. Smith recruited her as a source and, a short time later, became her lover. Leung had been active on China issues since her college days. She was born Chan Man Ying in Guangdong Province in China on May 1, 1954, and her upbringing was provided by a childless aunt who moved them to Hong Kong and then emigrated to the United States in 1970. In 1976, she graduated with a double major in architecture and engineering from Cornell University , where she participated in pro-China organizations. After receiving an MBA from the University of Chicago, she moved to California in 1980 to work for Sida International, a company that promoted trade with the PRC. Before long, Leung and her husband, Kam, a medical company executive, became active in political fund-raising and began rubbing shoulders with southern California’s political elite. She served on the board of the Los Angeles World Affairs Council alongside former secretary of state Warren Christopher; Disney’s CEO, Michael Eisner; and former Los Angeles Dodgers owner Pete O’Malley.4 More important, because of her fluent Chinese and Spies for China 253 connections to the government in Beijing, she began organizing banquets for visiting Chinese officials and soon served as a bridge on trade and other issues between high-level Chinese and California politicians. Leung’s high-level Chinese contacts and frequent trips to the PRC...