En­gi­neer guilty of giv­ing data to China

The Washington Times Weekly - - Front Page - By Bill Gertz

A Chi­nese-born en­gi­neer was con­victed in fed­eral court in Cal­i­for­nia May 10 of be­ing an un­reg­is­tered Chi­nese agent who con­spired to sup­ply de­fense tech­nol­ogy to Bei­jing.

Chi Mak, 66, was found guilty of help­ing pro­vide China un­clas­si­fied but ex­port-con­trolled in­for­ma­tion, in­clud­ing data on a sub­ma­rine elec­tronic sys­tem and a quiet elec­tronic propul­sion sys­tem planned for fu­ture war­ships.

Mak was found guilty of con­spir­acy to vi­o­late ex­port reg­u­la­tions and for fail­ing to reg­is­ter as a Chi­nese agent, af­ter sev­eral days of de­lib­er­a­tions. The trial lasted six weeks.

“We were con­fi­dent from the start, and we’re very happy with the ver­dict,” As­sis­tant U.S. At­tor­ney Greg Sta­ples said.

Sen­tenc­ing was set for Sept. 10, and Mak faces up to 35 years in prison. Mak at first showed no emo­tion when the ver­dict was read but then ap­peared to fight tears as de­fense at­tor­ney Mar­i­lyn Bed­narski teared up and rubbed his back.

Prose­cu­tors dropped charges ac­cus­ing Mak of ex­port­ing. They said Mak’s brother Tai Mak was the courier in the spy ring and will face those charges in a later trial.

The trial was the first in what U.S. of­fi­cials say will be sev­eral cases in­volv­ing a fam­ily spy ring that also in­cluded both Mak brothers’ wives and Tai Mak’s son Billy

busi­ness with BDA, fac­ing po­ten­tial U.S. penal­ties. The Trea­sury has so far not been able to sat­isfy any third­coun­try in­sti­tu­tion that it can safely han­dle the money, and diplo­mats said it might be eas­ier to grant an ex­emp­tion to an Amer­i­can bank.

“If there is any re­quire­ment for an opin­ion from the Trea­sury De­part­ment as to whether or not this is a trans­ac­tion that the fi­nan­cial in­sti­tu­tions in­volved would feel com­fort­able do­ing, then the Trea­sury De­part­ment will take a look at that, see what it is that they can do,” State De­part­ment spokesman Sean McCor­mack said when asked if the money could be de­posited in an Amer­i­can bank.

“The main is­sue is to get BDA over and done with, to have it com­pleted so we can get back to the six­party talks and fo­cus on de­nu­cle­ariz­ing the Korean Penin­sula,” he said at a daily brief­ing.

Trea­sury of­fi­cials re­fused to com­ment but did not dis­pute Mr. McCor­mack’s re­marks. A se­nior State De­part­ment of­fi­cial de­clined to rule out that the $25 mil­lion — or part of it — might end up in a U.S. bank ac­count. The money has been linked to il­licit ac­tiv­i­ties.

The two de­part­ments have had dis­agree­ments in the past on how to han­dle the funds, with Sec­re­tary of State Con­doleezza Rice cham­pi­oning a more con­cil­ia­tory approach.

In a land­mark Feb. 13 deal with the United States, China, Ja­pan, South Korea and Rus­sia, the North agreed to shut down the Yong­byon nu­clear re­ac­tor by April 14. But it missed the dead­line, de­mand­ing the $25 mil­lion be re­leased first.

The Bush ad­min­is­tra­tion des­ig­nated BDA as a “pri­mary mon­ey­laun­der­ing con­cern” in the fall of 2005 un­der Sec­tion 311 of the Pa­triot Act. U.S. of­fi­cials said the ac­tion had a sig­nif­i­cant im­pact on the North’s pro­lif­er­a­tion and other il­licit ac­tiv­i­ties, and it sent a strong sig­nal to other vi­o­la­tors, such as Iran.

But as nu­clear ne­go­ti­a­tions with Py­ongyang pro­gressed this spring, Wash­ing­ton al­lowed BDA to re­lease the money even as the Trea­sury banned U.S. banks from do­ing busi­ness with the Ma­cao bank.

Ad­min­is­tra­tion of­fi­cials on May 9 could not ex­plain the le­gal process of grant­ing an ex­emp­tion from that rul­ing for one bank, or how al­low­ing that same $25 mil­lion into a U.S. bank would not vi­o­late the Pa­triot Act.

For­mer ad­min­is­tra­tion of­fi­cials, who be­long to op­po­site sides of the North Korea pol­icy de­bate, ex­pressed shock and dis­be­lief that the ad­min­is­tra­tion was think­ing of let­ting the “dirty” North Korean money make its way to an Amer­i­can in­sti­tu­tion, with full ac­cess to the in­ter­na­tional fi­nan­cial sys­tem.

“I can’t be­lieve they will do that,” said Charles L. Pritchard, the State De­part­ment’s for­mer spe­cial en­voy for talks with the North who re­signed in protest at the ad­min­is­tra­tion’s hard-line pol­icy in 2003. “They would be vi­o­lat­ing their own [March] rul­ing.”

The hard-line pol­icy fell apart this year when the United States agreed to re­wards for the North if it dis­man­tled its Yong­byon re­ac­tor. More- over, the State De­part­ment said it would trust Py­ongyang to spend the $25 mil­lion prop­erly.

The North Kore­ans have re­fused to with­draw the money in cash, in­sist­ing that it be trans­ferred to an ac­count in an­other bank so they can make with­drawals and de­posits as they please. They first wanted to use a Chi­nese bank, and then were re­ported to have ap­proached in­sti­tu­tions in Rus­sia, Italy, South Korea, the United States and other coun­tries.

“The in­di­vid­ual banks, re­gard­less if they are Amer­i­can or Ital­ian or Rus­sian or what­ever fla­vor, they are go­ing to have to make their own de­ci­sions about risk and re­ward, about any rep­u­ta­tional risk that might come along with this,” Mr. McCor­mack said of a po­ten­tial trans­fer.

“I would as­sume that, as part of that cal­cu­la­tion, that they are go­ing to look at what the re­ac­tion from the De­part­ment of Trea­sury might be,” he said. He added that the Trea­sury would be will­ing to give “some opin­ion or sig­nal.”

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