Nest of Spies ~ the Startling Truth About Foreign Agents at Work Within Canada’s Borders

by Fabrice de Pierrebourg and Michel Juneau-Katsuya

The clever strategist is subtle, so much so that he is no longer visible. The clever strategist is discreet, so much so that he can not be heard. Thus he becomes the master of his enemy’s destiny. – Sun Tzu, The Art of War (c. 509 BCE) (1)

Espionage is a multi-faceted problem that challenges our society in many ways. The theft of Canadian cutting edge research in new products and technologies in only one of them, the visible tip of a vast, submerged and problematical iceberg. (2) Many of these issues are poorly understood by the general public. in some cases, information has been suppressed. A strange silence surrounds the subject in this country. (2) 

Consider this: there have been hundreds of prosecutions  of spies, including domestic traitors, in the United States, France, and Great Britain during the past fifteen years alone. But there has never been a prosecution for espionage in Canada. Not one. The widespread belief that espionage ended when the Cold War ended is unfortunately not true. The overall extent of espionage today is much greater than it was during the Cold War. Instead of two politically hostile blocs confronting each other [US and USSR], we now live in a global political and economic configuration where there is cloak-and-dagger warfare of all against all. (3) 

Canada’s oversized role in this drama is due to four factors.  First is our advanced technology (others want our know-how); second is the economy (they want our markets); third is political (they need to manipulate our national and international policies, making certain that citizens of foreign birth do not criticize their homelands). The final factor is military (they want our secrets, and those our allies share with us). (3-4)

And then we must consider one of the dubious consequences of multiculturalism, that wonderful human mosaic, which we rightly celebrate, but which also readily conceals the newly arrived spy. It offers him or her a useful reservoir of potential sources for the homeland, as well as informers anxious to denounce malcontents. And finally, there is the open-hearted character of Canadians, who welcome foreigners without asking a lot of questions. This propensity arises from our liberal and inclusive culture, and we are proud of it, but it is readily abused by curious visitors: particularly those who intend to leave with intellectual property in their pockets. (4) 

Where espionage is concerned, the change is two-fold. The first is that military espionage has indeed declined. [Really? Somehow I highly doubt that] The other part, the important part, is that its resources were redeployed to the small but expanding speciality of economic espionage. What began as small and intermittent theft of industrial research has now grown into a vast and destabilizing form of economic warfare. (16) 

The mafiosi and the oligarchs grew fat during the chaotic years of the USSR’s collapse. [Whitney Webb documents this, too, in her incredible tome, One Nation Under Blackmail, in which she documents the prominent Americans who also grew fat from the USSR’s collapse.] Today they are held in contempt by average Russians, but that is only because they successfully seized a good part of the country riches through the purchase of state companies at derisory prices. At the same time, the security services ransacked the treasury of the Soviet Communist Party and used the booty to set up more than 600 overseas corporations. This new structure was essentially in place by 1993. Since then there has been a golden age of collusion among organized crime, legitimate business, bankers, and corrupt politicians. In a 1994 report, CSIS alluded to the disappearance of billions of dollars in value from the Russian economy in what it called a “criminal revolution”. With the aid of Vladimir Putin, scores of agents from the old KGB infiltrated the worlds of politics and business. A Russian sociologist reported in 2005 that around 80 percent of key positions in the corporate and government hierarchy were occupied by siloviki, a sinister term referring to senior police and military officers now tricked out with bespoke suits and attaché cases.  (21-22)

After the events of September 11, 2001, however, the other countries of the western alliance also turned their backs on the old Cold War template. Overnight most investigative resources were shifted to Osama bin Laden, to the great satisfaction of the growing army of Russian and Chinese undercover agents. (29) 

This leads us back to Biopreparat, a biological weapons program started in 1973. Since the USSR had signed a treaty to ban biological weapons less than a year before, it was always publicly described as a routine pharmaceutical research project. It remained one of the best kept secrets of the Cold War. Difficult to track because it was decentralized in a string of laboratories scattered across remote regions of the USSR, Biopreparat was scaled to produce an armoury of fully usable weapons derived from toxins, deadly viruses, and bacteria. (64) 

For all the resources devoted to it, this dark program depended on infusions of information form the advanced laboratories of the West. According to Alibekov, the second-in-command at Biopreparat who had defected to the US, it was the job of the KGB to steal these toxins and viruses and send the samples back to Biopreparat. Alibekov revealed how agents from the highly secretive Department 12 of Directory S were posted around the planet in order to expedite the business. They used the diplomatic bag from various Soviet embassies and consulates to transport laboratory phials filled with dehydrated germ cells, cultures, and assorted deadly substances that they had acquired from their collaborators. These plague bags travelled in the pilot’s cabin of Aeroflot jetliners. (64) 

Agents linked to Biopreparat targeted in particular the Defense and Development agency at the Canadian Air Force base in Suffield, Alberta. The mandate of this highly classified operation is to create medical treatments and systems of defence against both chemical and biological attack. It was a place entirely fascinating to Soviet authorities, and only a simpleton would imagine that they are any less interested today. (65) Their final destination was either Suffield, Alberta, or the military research centre at Fort Detrick, Maryland—two biological laboratories working in close concert. [65)  

Not too long ago, should anybody think the Biopreparat story a relic of another era, the British security agency MI-6 caught Russian spies lurking near a biological research center. Their objective was to steal ampoules containing anthrax and Ebola virus. That was in 2007. (66) 

With the dramatic dissolution of the Soviet bloc after 1989, Canadian politicians competed with each other to cut back on the amount of money spent on national security. Some leaders babbled about “peace dividends” and seriously contemplated abolishing counter-espionage altogether. CSIS’s budgets and staff were reduced by nearly half, at a time when hostile governments were already rebuilding their espionage networks. This raises questions about the Canadian political system. Why do we produce so few leaders capable of dealing seriously with these issues? There is in this country a persistent belief that espionage is somebody else’s problem. Do we really believe that Ronald Reagan’s “evil empire” has simply faded away? If so, who is sending all these freshly minted and highly motivated spies to Canada? Do we have something they want? Why do China, Israel, France, Pakistan, and many other countries also do us the honour of sending legions of spies to take up a Canadian address? (122)

These are the principal areas of [espionage] activity: economic and industrial; surveillance and suppression of dissidents; manipulation of foreign political systems; military espionage; research into the proliferation of weapons of mass destruction. (122-3)

To put it simply, spies operate outside of all legal frameworks. The local loyalties that most of us feel have no importance on this chessboard, where all moves are strategic and the players treat people and places as mere pawns, to be played according to the needs of the game. This is the dynamic that determines Canada’s role in the great scheme of things. It is not, perhaps, an inspiring one. At worst, chance has dealt us the role of victim; at best, we are a  happenstance pawn in a deadly game much bigger than ourselves.  (123) 

After the collapse of the Soviet Union, leaders of the G8 countries committed themselves to economic espionage. They made no secret of it. The stakes had changed, and it was time to become proactive. Canada, however, did not make this commitment. Our governments were aware of economic espionage, of course, but never did more than timidly advise the intelligence services to keep a watching brief on the matter. This was hardly the same thing as adopting the decisive and ruthless policies that our supposed allies were already employing. (124)

Canadians would be shocked if they understood the climate of fear in which many of their fellow citizens must live, for no reason other than the happenstance that they were born abroad and chose to come to Canada. Many immigrant communities are, in effect, taken hostage by agents of their homeland government. These governments have few or no democratic scruples. When the victims approach Canadian authorities for help they are met with avoidance and moral equivocation. After being repeatedly rebuffed, they lose hope. After all, the Canadian government is now the only government they have. If it chooses to ignore them, there is nowhere else to go. (135)

Weapons of mass destruction (WMD) research, from nuclear to chemical to bacteriological, is carried out in our universities. That’s why our weaponry and operational plans are of great interest to foreign powers. They are also aware that our allies share desirable information with us, and that hundreds of foreign military officers are posted to our army, navy and air force bases. International trafficking in Canadian-made weaponry is another poorly understood subject. We are an unusually open society and, for the time being at least, we enjoy a reputation for integrity. International arms traffickers take advantage of the situation. They steal weapon prototypes or use Canada as a convenient transit route for international arms shipments. (139)

“Dual purpose” technologies are those originally developed for civilian products but which can also be used to improve weapons; sometimes they appear on the frontier between bio-weapon research and legitimate medical research. They are subject to high security, but foreign agents exploit the lapses that occur in transferring them between private sector and military use. (139)

Most spies in Canada are working under protection of diplomatic immunity. It’s the best possible cover because it allows the “diplomat” to socialize with Canadians from all levels of society. If this “diplomat” commits a crime, whether espionage-related or a regular Criminal Code offence, he or she cannot be tried before a Canadian judge, only sent home as a persona non grata. (140) 

HUMINT is Human Intelligence, meaning information gathered from informants. SIGINT is Signals Intelligence, gathered by intercepting all forms of electronic communication. OSINT is Open Source Intelligence, or information that might be published in newspapers or broadcast publicly. ( 141)  

Of all the countries that happily dance across the Canadian border to shoplift out technology, China is far and away the busiest and the most aggressive. Chinese agents exploit a certain liberal Canadian sympathy toward their country that dates back to the 1960s. they don’t even much bother to disguise what they’re doing as they operate out of their Ottawa embassy and their three consulates in Vancouver, Calgary and Toronto. Meanwhile, the Canadian government—including, unfortunately, CSIS itself—is so befuddled that it hasn’t begun to understand how serious the problem is. (147) 

In the US, UK, and Australia there is an average of one trial per month of Chinese agents charged with economic or industrial espionage. One per month. In Canada, Chinese spies have never been brought to court, even though Canada is at least as rich a target as those other countries. (147) 

Although China is capable of innovation, the underpinnings of its culture and society are heavily connected to tradition. There are two particularly useful tools for understanding what kind of tradition this is: Sun Tzu’s book The Art of War and the ancient board game called Go. The game of Go, with its underpinnings of philosophy and strategic thought, has been learned and played as a discipline by China’s emperors, ministers of state, warlords, and imperial officers since the fourth century BCE. Used for centuries as a way for the Chinese to shape strategy, the game is based on an initial division of power between the realm of outright control and the realm of influence. The player seeks to move his pieces on the board in such a way as, first, to encircle and conquer territory outright, and second, to encircle and thereby influence whatever can’t be conquered. Whoever possesses the most territory at the end wins. (150) 

Sun Tzu’s life predates even the popularity of Go. He was a general in the sixth century BCE. His small book, which has thirteen chapters, covers military strategy generally but concentrates on the mechanics of leading successful campaigns and of carrying on clandestine operations within enemy territory. It is part of today’s compulsory curriculum for the Chinese officer corps and, of course, aspiring SIS agents. (150)

Chinese strategists have long understood that influence is more important than control. This is because influence, wisely deployed, will ultimately lead to control. That’s why the Go player will rarely launch a frontal assault. Almost always he begins by moving his players to locations where the enemy finds them to be unthreatening and even useful. (151) 

When a nation sets out to make friends, the first “soldiers” into the battle are honey-tongued emissaries who really do hope for good relations with your country. If you’ll be our special friend, they say, we’ll buy what we need from you alone. And when we sell, well, talk about getting it wholesale! You won’t believe the deals! (151) 

The Security and Intelligence Service (SIS) of China plans its operations in generational rather than calendar-year intervals. This kind of long-term planning, all by itself and without further cleverness, is enough to baffle the fast-food mentality of western intelligence agencies. These take as their mantra the dubious slogan “Time is money.” Meanwhile, their Chinese counterparts sit back and relax. Given the time-obsession of the enemy, it’s only a question of waiting for him to grow tired and inattentive. When the other side drops his guard, that’s the moment to activate one’s resources. Also, if you flood the enemy with an overwhelming number of agents, some might be caught but several will succeed. (152-3) 

What was going on during all those years the agents were out of contact with the homeland? They were steadily climbing the career ladder of their chosen Canadian company or their government ministry. In either case, they’re now at the executive level and they have received security clearance. To the employer they are long-term, very loyal employees, and giving then a high-level clearance was the easy and obvious thing to do. (153) 

And now, by way of recalling that it is useful to be curious the workings of Chinese culture, remember that in China there are countless thousands of young people who aspire to become exactly such sleeper agents for their homeland. (153)   

As a totalitarian country, China has the additional advantage of knowing that its citizens will do exactly what they’re told. To refuse is unthinkable. If you hesitate, your family will be told that you are a “traitor” to the nation. The punishment for your ambivalence will be meted out to those you hold nearest and dearest. (155) 

The elaborate Hollywood-type masquerade that lets a foreign agent “infiltrate” a foreign government or corporation is not much used in the real world. The perpetrator is far likelier to be an exceedingly naive Canadian who is anxious to please a new Chinese “friend”. The friend in question is often a diplomat who is grateful for any information that might help him to “do his job or come to a better understanding of Canada.” From our perspective, the most amazing thing is the puppy-dog-like wagging of Canadian tails as we endeavor to be of service to our exotic new friends. (157) 

To expand and anchor its influence, China has developed a strategy similar to that of the Trojan horse. Confucius, the celebrated moral and political philosopher of ancient China, was far ahead of his time in understanding that peace and justice can thrive only where rulers are professional and scrupulously honest. Today Confucius whose writings were once banned by Mao Zedong because they emphasize respect for a hierarchy. This was thought to be “reactionary” and not compatible with Communist principles. But history has its own sense of irony, and today the honest humanist described by Confucius is seen as the saviour of the system, the good federalist who will ride to the rescue and revive China’s pride and nationalism. (158) 

Confucius Institutes have since multiplied with astonishing speed and can now be found in more than eighty countries. They are ubiquitous in Africa, where China is working to establish a dominant presence. After only five years, there are 314 in operation in 81 countries, and the program is just getting underway. China expects to be operating a thousand of them by the year 2020. [where are they at now?] (159) 

The big issue is this: are the partnership agreements that these Institutes habitually sign with both a Chinese and (in this case) Canadian university—and in many cases with Chinese high-tech enterprises—not in fact a cover-up for a gigantic system of siphoning and draining away of other people’s scientific research? In other words, are the Confucius Institutes a case of “soft power” in the service of “soft spying”? (160) 

The Israeli security agency Mossad sold the software product called Promis to a number of police forces and security agencies around the world—including Canada—in the 1990s. The programming turned out to include a “trap” or “back door.” It was a dirty trick that allowed Mossad to follow the movements of Palestinians in Canada when they were under surveillance by our police. The information was used in Israel’s bloody struggle with Yasser Arafat and the PLO. (168-9) 

Chinese Han immigrants to Tibet now outnumber the native population by more than 2 million, and newcomers continue to throng toward Tibet’s capital city, Lhasa, with the kind of energy that Canadians can muster only when there’s a round of job offerings in the Alberta tar sands. Further masses of Han colonists will arrive on the recently completed “railway to the roof of the world” (sometimes described as the “railway of colonization”), which was built with the help of Bombardier, Nortel, and General Electric. Beijing spent $4.2 billion on the project. (184)

Jiang Chengzong would like Canadians to believe that the building of the railway proceeded from affection for the people of Tibet, rather than its strategic proximity to India, not to mention the mineral wealth of the sprawling Himalayan country. This is a remarkable assertion of selflessness in light of reports that Tibet contains the world’s largest reserves of chrome and aluminum, together with not insignificant quantities of uranium and electric-car-powering lithium. (185)

Today, former Ambassador Mei sets aside diplomacy in favour of a straightforward plea for China. The propaganda is adroitly blended with economic blackmail. China, he says, is patiently waiting for Canada to come to its senses. How much longer can China maintain the current level of trade and commercial exchange if Canada keeps being so confrontational? The audience gets the subtext. They are people of influence, and China requires them to use their influence to change Canada’s foreign policy. Otherwise they will most certainly miss the diplomatic gravy train. 

“Foreign interference” is a polite diplomatic term that masks a little-known aspect of international espionage. Setting aside for a moment the everyday theft of commercial and technological information, let’s take a look at the extensive machinery that undermines Canadian government policy-making. It aims to intimidate the host government and suborn public and private organizations that can advance the foreign regime’s interests. At least 20 foreign countries have agents in Canada…Obviously this is unacceptable to a democracy. But they won’t be discouraged. Nor will they stop shadowing, subverting, harassing, intimidating, and coercing their diaspora communities here, especially the many political movements in exile. Foreign interference now appears to be the most serious threat to Canada, at least so far as the scale of the operations is concerned. More than 6 million Canadians, about one-fifth of the population, were born elsewhere. Multiculturalism has given birth to multi-espionage and multi-intimidation.  (187) 

The Falun Gong (also called Falun Dafa) was founded—or perhaps “invented” is a better word—by Li Hongzhi in 1992. Its adepts practise a highly original mixture of non-violent Buddhist philosophy and Taoist gymnastics. At the beginning the movement was legal. But Falun Gong suffered a sudden reversal of fortune one night in April 1999. Thousands of its devotees from all corners of China converged without warning in Beijing. There they surrounded the headquarters of the government and the Communist Party, where they stood in utter silence for several hours. Then they left the area in an orderly fashion, without making a sound. (201-2)

The event was pacifist and brief, although certainly eccentric and unsettling. And all might have been well, except that the rally had fallen ten years after the infamous massacre of students in nearby Tiananmen Square. The authorities realized the connection, as they were meant to. But then they panicked…it was humiliating to the apparatchiks that such a well-organized event had occurred without their spies hearing of it first. Lashing out reflexively, they banned Falun Gong and denounced it as a “heretic organization”. Its followers were attacked and beaten wherever they were found. This quasi-hysterical frenzy has now passed beyond China’s borders. (202)

When asked about the nature of Falun Gong, the group’s Canadian spokesperson, Lucy Zhou, wants one thing understood: “We are ordinary people. Falun Gong is not a sect. Nobody is a ‘member’ of it. It’s simply a way of life…that is beneficial for a person’s health. (203-4)

Mehmet Tohti, a 35-year-old official of the Uyghur Canadian Association is frightened. “Since September 11, 2001, we’ve been the Chechens of China.” He beings by describing the Uyghers and their situation in a remote corner of China’s far west. They speak a Turkic language that has no connection at all with Chinese languages. Until 1949 they had no connection with China. But that year the Communist forces, which had just seized power, pushed into the far west and seized control of eastern Turkistan as well. It was given a new name—the Autonomous Region of Xinjiang—and it was soon colonized. It is a vast area of 2 million square kilometers, and today there are approximately as many Han Chinese living there as indigenous Uyghurs: each group makes up about 40% of the population. 

Where terrorism is concerned, Canadians at best display the wide-eyed detachment of those who find a subject interesting but in no way connected to themselves. Concerning Air India Flight 182, however, we manage something more than detachment: it’s been stricken from memory as if it never existed. (235)

Irangate was a truly scandalous business. It gave birth to the “October Surprise” theory, which held that Ronald Reagan’s Republicans plotted with the ayatollahs in order to bring about the defeat of Jimmy Carter in the 1980 presidential election. Ben-Menashe believes the plot was nicely tied up and packaged in October, a month before the election, in a salon of the ultra-chic Ritz Hotel in Paris. This was the deal: the United States and Israel supplied weapons to Iran’s religious leaders to help them in their war with Iraq, while unfreezing their financial assets, which had been blocked in American banks. The quid pro quo was that Teheran would keep the fifty-four hostages from the American embassy under lock and key until after the U.S. elections were over. (274-5)

“The weapons came from the United States….Pierre Trudeau agreed to it after an informal meeting with Israel.” Twice during 2005, a Canadian airport was used to ship weapons and explosives from the US to a country on the Indian Subcontinent that was threatened by a Marxist uprising. So the Eitan/Ben-Menashe operation would hardly the first time Canada served as a convenient doormat to erase the muddy footprints of arms traffickers. (275) 

When a Canadian corporation was asked by the Chinese for an “official visit” it was a technique of Chinese espionage.  “The board members started babbling excitedly about the size of the Chinese market. They were like teenage boys asking the homecoming queen for a date.” (283) The corp took all kinds of measures to protect their assets. “But the security boss was still anxious He’d made time to join the Chinese visitors personally for their tours of the plant. He’d kept his eyes open as well, and he’d noticed something odd. It was the shoes. Nobody’s shoes stay completely clean walking around a factory, of course. But the Chinese engineers’ shoes were remarkably dirty. Stuff from the floor seemed almost to jump onto them. And one guy appeared to have breadcrumbs that clung improbably to his rather long tie. The security man was a quick thinker, and he made up a rule on the spot that required visitors to remove their shoes before moving on to the next department. The shoes were rushed to the lab, where he was amazed to learn that one of them contained a magnet that grabbed scraps of metal from the factory floor. As for the visitor who had the annoying habit of leaning into garbage pails filled with scrap metal, they’d had to confront hi. Damned if he didn’t turn out to have a magnet in his tie as well. This was the strangest example of reverse engineering he’d ever seen. The plan was clearly to take the precious scraps back to China and find out what chemical elements in what proportions had gone into fabricating them. These visitors meant to rob his company blind. (284) 

There’s a difference between “information” and “intelligence”. Information is what you collect during your research. Intelligence is the outcome of a process. This is the formula we use to describe how intelligence is produced: Information + Analysis = Intelligence. (287)

Steaming an envelope is neither as old-fashioned nor as uncommon as one might think. In Canada it is sometimes risked by private detectives, but not often, because it’s a criminal act with heavy consequences. It’s also easy to get caught doing it. But none of this applies once you leave Canada. Certain national security services simply open all the mail that comes from foreign countries, plucking confidential corporate information and occasionally uncovering a juicy traitor or two. (298) 

Garbage picking. What a glamourous business we have here! From dumpster-diving to the delicate sifting of monsieur’s kitchen scraps, the trained agents of a nation’s lofty secret service organizations rub elbows with gumshoes and peepers from back-alley agencies. (299)

Exchanging engineers and technicians is a reliable and popular method of slipping one’s agents into a targeted competitor’s operation. When a delegation arrives at your front door, it will contain a number of spies with a tightly designed plan for stealing information. Sometimes these delegations are made up entirely of spies. This is the moral of an unfortunate tale told by a well-known Canadian corporation, dominant in its market, that accepted an offer to build a partnership with a Chinese company. As a condition of the arrangement, the Chinese bosses insisted on sending a team of twenty-five engineers and technicians for a lengthy working visit to their Canadian “partner”. Considering the stakes, the CEO of the Canadian enterprise disregarded his security director’s warnings and pleas. …[despite all measures to protect their intellectual property] after 72 hours the Chinese engineers had broken into every forbidden database. (300-1)

What really went beyond all limits in this episode was the reaction of the company’s CEO when the “visitors” were unmasked. This occurred at a board meeting where the CEO was present. When the security director had finished exhibiting the evidence and drawing his conclusions, the CEO asked to speak. He curtly informed the security director that his comments were “immoderate” and that the presentation was “not exactly what we were looking for”. In effect, the company did not want to know what was going on. The security director was later warned that “fear mongering” was bad for his career. (301-2) 

Then there is the tactic of eliminating the researchers. We wish this were a tongue-in-cheek way of suggesting they be bribed, but we are in fact talking about murdering them. The pharmaceutical research industry has a remarkable reputation for brutality. The development and marketing of a single new medication costs on average $800 million, which means that a professional killer’s $50-60K tab is just so much small change… (306) 

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