Chinese spies are on a quest: to steal corn
Economic espionage proves to be a rising problem in U.S. as China seeks better crops
DES MOINES, IOWA— It was a chilly spring day when an Iowa farmer spotted something odd in his freshly planted cornfield: a short, bald Asian man on his knees, digging up seeds.
Not just any seeds — special inbred seeds, the product of years of secret research and millions of dollars in corporate investment, so confidential that not even the farmer knew exactly what he was growing.
The Iowa resident approached the trespasser, who grew flush and nervous, stammering something about being from a local university. When the farmer diverted his attention briefly to take a phone call, the stranger bolted to a waiting car and sped away.
That curious encounter eventually led to an exhaustive five-year federal investigation and prosecution into one of the most brazen examples of Chinese economic espionage against the U.S., a crime that annually costs American companies at least $150 billion.
The FBI pulled out all the stops to catch the spies. Agents obtained surveillance warrants from the nation’s secret intelligence court, planted GPS-tracking devices on cars, trailed operatives from airplanes and bugged their phones.
The probe culminated in October with a three-year prison sentence for Mo Hailong, 47, a Chinese citizen and U.S. legal resident who works for a Chinese conglomerate.
Federal officials say the prosecution of Mo, also known as Robert Mo, sent a message to China and others that economic espionage will not go unpunished.
But outside experts say the case also revealed the difficulty and sometimes futility of bringing justice to those responsible for feeding China’s ravenous appetite for U.S. intellectual property.
Mo, who is being treated for a rare form of cancer, received a sentence that was even more lenient than the maximum five years laid out in his plea deal. Five others indicted in the plot remain free in China, out of the reach of U.S. law enforcement. And though the FBI suspected the Chinese government was involved in the thefts, it was never able to prove the link.
Worse, even though the scheme was exposed, Chinese companies almost certainly got their hands on some of the lucrative seeds. Five years before his arrest, court records show, Mo was being praised by his superiors for the quality of seeds he already had stolen.
“You have to have some kind of stick to get them to think twice,” said Melanie Reid, professor at Lincoln Memorial University’s Duncan School of Law.
“Because these investigations can be quite complicated and many of the players are in other countries and protected from U.S. prosecution, it is unclear whether these types of cases are making a dent. Theft of trade secrets is not only promoted by Chinese government policies and state-backed companies, but it also reflects their societal attitude toward intellectual property. They simply don’t see stealing U.S. trade secrets as a crime.”
Some U.S. law enforcement officials echoed those observations, saying there is no clear evidence on the ground that such prosecutions have slowed China’s quest for U.S. secrets.
But they say doing nothing isn’t an option either, and they note that ag- gressive prosecutions against other forms of espionage by Chinese, such as cyber hacking, appear to have deterred such acts.
The Mo case highlighted the challenges of such prosecutions, which often span the globe and require the assistance of scientists, analysts, linguists and corporate executives who can be wary about co-operating for fear of disclosing their trade secrets.
Proving the Chinese government was involved in the theft was seen as critical to deterring future attempts, but not surprisingly, China refused to co-operate or turn over information and suspects for trial.
The interest in Iowa seed was plain: China’s demand for corn is expected to outstrip supply in the next decade.
To close that gap, China would benefit from planting better corn seed — such as the kind being produced by Pioneer and Monsanto.
Creating robust seeds requires the breeding of two pure “inbred” lines of seed to craft a “hybrid” that is later sold to the public.
Developing a single inbred can cost as much as $30 million to $40 million in laboratory testing, field work and trial and error; companies evaluate scores of inbreds to develop a single hybrid.
To bring criminal charges, the FBI first had to genetically test the seeds to prove they were the product of U.S. trade secrets.
It took the bureau nine months to iron out the agreements with Pioneer and Monsanto to conduct the tests at an independent lab.
“Neither Pioneer nor Monsanto understandably wanted the other to have their secrets,” let alone a Chinese company, FBI special agent Mark Betten said.
The tests revealed that many of the seeds were inbreds belonging to both companies.
In December 2013, agents arrested Mo at his home in Boca Raton, Fla. By then, the other defendants were outside the U.S.
Calls to the Chinese embassy in Washington were not returned, nor were messages and emails left with DBN and Kings Nower.
Pioneer declined to comment on the case. Monsanto said in a statement that it fully cooperated with the FBI and is pleased “this matter has been concluded.”
China’s demand for corn is expected to outstrip supply in the next decade, and would benefit from U.S. seeds.
Mo Hailong, right, and his attorney, Mark Weinhardt, after the Florida resident was sentenced to three years in prison for stealing trade secrets.