By Jai Kumar Verma
New Delhi. 31 October 2022. Spying is the world’s second oldest profession. Kautilya the great Indian statesman mentioned about spies, Vish Kanyas (poisonous girls) in his famous book “Arthashastra” which was written in four BC. Kautilya who was also known as Chanakya vividly mentioned about Covert Operations which were described as the most vital element of state. The use of spies was also mentioned in the ‘Book of Joshua’.
In the present world the importance of intelligence is considerably enhanced. The powerful nations collect intelligence about foes as well as friends as in international relations friends turn enemies and vice versa. Hence collection of intelligence is a continuous process. There are agents, sub-agents, conscious as well as unconscious sources. However, one has to be incredibly careful so that the agent does not become double agent as it can be extremely harmful for the country. The double agents must be handled very carefully as they are double edged weapons.
Katrina Leung was a high value Federal Bureau of Investigation (FBI) agent who worked for 18 years, and FBI paid her $1.7 million for services and expenses. But she was a double agent and also worked for Chinese intelligence agency Ministry of State Security (MSS) and supplied classified documents to MSS without authorisation from FBI. The US State Department alleged that she supplied information pertaining to national defence and also compromised classified details of FBI’s Chinese counterintelligence programme. She had several nom de plumes including Chen Man Ying, Chen Wen Ying, Luo Zhongshan, Parlor Maid etc.
Leung emigrated to the United States on Taiwanese passport at the tender age of 16 years. Took her education in US which made her case strong. In 1980 she developed close relationship with a PRC activist, who was involved in illegal transfer of technology to China from US. She also worked as general manager in an import-export firm which was also investigated by FBI. She was investigated by FBI under the suspicion that she was collecting intelligence and was supplying it to PRC however FBI closed the investigation once she left the job.
James J Smith who was Special agent of FBI again investigated her in 1981 but she impressed her so much that he raised her as a source and gave her nom de plume of “Parlor maid”. She got US citizenship in March 1984 with assistance from her handling officer (HO) Smith. On the recommendation of HO, FBI formulated a plan so that she can be recruited by MSS and becomes a double agent. In June 1984 she was recruited by MSS although Chinese intelligence agency had information that she was a low-level source of FBI. Leung was intelligent and she passed two polygraph tests one in 1984 and the other in1986 successfully and hence no doubt was raised by FBI. Later she avoided polygraph tests with active assistance from Smith.
As a double agent she became important in FBI as well as in Chinese Community residing in West Coast. She not only entertained Chinese diplomatic officials but also influenced Yang Shangkun President of China who became her patron. FBI financed her frequent trips to China where she was recruited by MSS.
In view of her information and on the basis of Smith’s recommendations FBI started giving monthly payments to her from August 1984.
FBI as well as Central Intelligence Agency (CIA) also appreciated her reports which were corroborated by another American asset reporting about China. She was sent to China after Tiananmen Square massacre and submitted the firsthand report about the political situation in China. She travelled to China and submitted a report when no information was coming out of China.
In 1990 FBI came to know that she passed classified information to MSS about FBI’s secret and sensitive technical counterintelligence operation. Nevertheless, Smith who developed intimate relationship with her defended her and the FBI had not put the details in her file although there were several communications on this issue. Not putting papers that she supplied classified information in file of Leung, was a big security lapse.
Again, there was a red flag in April 1991 when FBI got an audio tape in which Leung was informing MSS about the trip of FBI agent to China. Here she used a nom de plume to pass information to MSS. Smith again defended her and convinced his seniors that it is not prudent to discard Leung. The senior officers of FBI agreed to the recommendations of Smith because of his vast experience as well as the fact that he was handling Leung. Although the enquiry was set up, but they failed to ask how she got the information. As the previous incidents were not in the file the enquiry officers considered it as a first breach hence took a lenient view.
In 1992, FBI received trustworthy information that a woman namely Katrina in the FBI is a double agent and was supplying information to PRC. The FBI enquired the matter, but no action was taken. Again in 1992 Smith went to United Kingdom on pleasure trip and took Leung with him. Smith’s supervisor suspected it and went to receive Smith at airport. Although the supervisor noticed Leung with Smith but because of her dependence on Smith the supervisor failed to mention this breach of security in Leung’s file.
Nonetheless in May 2000 FBI again got reliable information that Leung was passing sensitive information about US to MSS. The surveillance and other investigation started, and it was revealed that she had intimate relationship with her handler Smith who was retired in November 2000. She also had infrequent relationship with another FBI Special Agent William Cleveland who was retired in 1993. Cleveland was stationed at San Francisco and Smith introduced Leung to him. Cleveland was a religious person, and sexual relationship was established because of Leung’s initiatives. The possibility that Leung lured Cleveland to gather information about San Francisco office cannot be ruled out. According to intelligence norms Smith should not have introduced her to other FBI officials. It is a big security breach. It also came to light that in past FBI came to know about few incidents about Leung passing information to MSS, but the cases were suppressed by the HO as he had intimate relationship with her.
As the suspicion on Leung was enhancing FBI started her surveillance from December 2001, after retirement of Smith. When her house was searched some incriminating material was also found. In November 2002 FBI also searched her baggage before and after her visit to China and found that she gave six photographs of FBI agents to MSS in China. In December 2002 she transmitted a top-secret document of FBI to MSS which was brought by Smith.
Both Smith and Leung were arrested in April 2003. The enquiry of the case was assigned to the Office of Inspector General (OIG). The OIG charged that although FBI received information several times that Leung is supplying classified documents to MSS but no action was taken against her as well as her handler Smith who was protecting her. The basic reason for avoiding any action against Smith was that FBI’s China programme was horribly understaffed. As the FBI’s China programme was directly involved in the security of the country hence it should not be understaffed.
Secondly as the relations between China and US were normalised in 1979, the flow of Chinese students and businessmen increased manifold. FBI planned to raise more sources in Chinese community but because of paucity of staff they could not take requisite actions.
Thirdly at this time, the headquarters of FBI delegated too many powers to field particularly about raising, handling, and terminating of the sources. Although there were positive results also because of devolution of power but as the control of headquarters loosened the chances of mishaps increased and the case of Leung occurred.
Fourthly Smith who was a graduate and Vietnam veteran had a good reputation in FBI and his superiors relied on his judgement. Although he was promoted but continued handling of Leung which is wrong from security angle. Agents are the assets of department and country, not of any individual.
The FBI also ignored background of Leung who entered on fake passport of Taiwan and the story she told to Smith and her initial story at the time of entering US were different. The FBI should have made more stringent enquiry on the past of Leung because of difference in the story mentioned in the record and the story narrated by her to Smith.
The chances that China sent her to US as a deep cover agent cannot be ruled out as she entered on Taiwanese passport and started contacting FBI personnel since 1970. In 1980 she shifted to Log Angles and stayed in an apartment building which was known as “nest of spies”. Here she also worked as General Manager in import-export company which was allegedly involved in illegal transfer of technology to PRC. Although FBI investigated about the firm but Leung left the company. FBI also came to know that she had intimate relations with a pro-PRC activist who was involved in technology transfer from US to PRC. But FBI dropped investigation against Leung when she left the job. In fact, more in-depth investigation should have conducted to ascertain why she left the job.
Smith raised Leung in 1982 after several interviews in which she was very informative and cooperative. Smith handled her for 18 years till he was retired in 2000. Smith was methodical and conducted full enquiry before her recruitment. However, in less than a year they developed sexual relationship which is unfortunate for any professional intelligence officer. Smith saved her several times because of the fear of an enquiry which would reveal his relationship with her and also because of sexual relationship, he developed soft corner for her.
In 1996 Smith was promoted, but continued to be posted at Los Angeles, started discussing and taking the advice of Leung about various counterintelligence operations of FBI against PRC. It was a Himalayan breach of security as the HO should not discuss other operations with the source and that too with a double agent.
FBI had good network of sources in PRC intelligence nexus and they repeatedly reported about Leung working for PRC but under one pretext or other action was not taken against her. Even when it was reported that PRC has an internal source in FBI no action was taken.
However, in December 2001 FBI decided to launch a full enquiry on Leung and it was disclosed that Smith and Leung had more intimate relationship than required between an agent and handling officer. Consequent upon a detailed enquiry both Smith and Leung were arrested on 9 April 2003 and later sentenced imprisonment.
The detailed enquiry revealed that although Smith was the main culprit but his bosses also failed to investigate the case against Smith although red flag was raised several times. There was over confidence on Smith and as she was a double agent some leverage was given to her which was also a breach of security.
The other great mistake was that whenever some adverse report was made against her either it was not enquired well or even in case of enquiry the report was not kept in her file.
(Jai Kumar Verma is a Delhi-based strategic analyst and Life member of United Services Institute of India and member of Manohar Parrikar Institute for Defence Studies and Analyses. The views in the article are solely the author’s. He can be contacted at editor.adu@gmail.com)
