Sun, Dec 22, 2013 - Page 9 News List

China’s weapon-snatching tactics

Since 2008, the number of China-related technology investigations has risen significantly, US investigators say

By John Shiffman and Duff Wilson  /  Reuters, OAKLAND, California

The initial e-mail triggered suspicion.

People and companies who buy these kinds of rad-chips are usually well-established, repeat customers — more multinational corporation than mom and pop.

Aeroflex salesmen had never heard of “Philip Hope” or his company, “Sierra Electronic Instruments.”

Most suspicious of all, just days after placing the order, Hope sent Aeroflex a certified check for the full amount, US$549,654. That was rare. Buyers were expected to make a deposit, but nobody paid up front.

The suspicious Aeroflex employees contacted the US’ Homeland Security Investigations (HSI), a division of Immigration and Customs Enforcement, which keeps a special counter-proliferation office in the space technology hub of Colorado Springs.

Based on quick record checks, the HSI agents drew a portrait of “Philip Hope.” The man was a Chinese immigrant and legal permanent resident, Philip Chaohui He, an engineer for the state of California assigned to a Bay Bridge renovation project. Sierra Electronic Instruments was a start-up run from the one-room office in Chinatown.

The HSI agents concluded that He was buying the rad-chips on behalf of someone else. Someone rich. Someone who could not legally acquire them. Probably someone in China — likely the China Aerospace Science and Technology Corp, a state-run entity that operates nearly all of China’s military and civilian space projects.

China Aerospace officials did not respond to requests for comment.

The rad-chips He ordered from Aeroflex are not the most powerful on the market, and could not operate a sophisticated military satellite on their own. Yet experts say they have few uses other than as one of the many components of a sophisticated satellite.

“You wouldn’t spend that kind of money on those microchips unless you intended to use them in much bigger satellites,” said Alvar Saenz-Otero, associate director of the Space Systems Lab at the Massachusetts Institute of Technology.

Despite the concerns about where and how the components might be used, He’s order of 312 rad-chips violated no law. These chips may be legally sold domestically, and to foreign buyers who obtain a US State Department license.

They may not be exported outside the US to certain nations, including China. He had the chips sent to his office address in Oakland, making the deal legal. If He tried to take them abroad, he would be breaking the law.

The agents faced the key question that comes in almost every counterproliferation case: Could they lure the suspect into a sting? If so, would it be worth the trouble?

Undercover operations are time-consuming, expensive and risky. If agents dangled rad-chips in front of the suspect and he got away, the components would probably end up on Chinese satellites. If they delivered the chips and watched him closely, he might lead them to a network traceable to Beijing.

COMPLICATIONS

The agents in the case faced another complication: At the time, Aeroflex — the very manufacturer enlisted to help with the sting — was itself under civil investigation for sending rad-chips to China.

Although that investigation was still under way, Aeroflex had already admitted that it sent more than 14,500 rad-chips to China between 2003 and 2008.

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