Spies Among Us

It was the most unlikely of places: Toronto’s Royal Agricultural Winter Fair, the annual farming exhibition that draws thousands. A man of what I guessed to be Chinese descent had a small silver camera and was surreptitiously taking pictures of the latest agricultural equipment on display. How many pictures can you take of a tractor? I thought. And then my rather slow-acting journalist’s radar went off—“Dollars to donuts if that guy’s not an industrial spy!”

Which is why I was particularly curious to review Nest of Spies: The Startling Truth About Foreign Agents at Work Within Canada’s Borders. The book, by Montreal journalist Fabrice de Pierrebourg and Michel Juneau-Katsuya, an ex-operative with the Canadian Security Intelligence Service, promises—at least on the jacket cover—to shed light on the pernicious problem of industrial espionage, which has “cost our nation thousands of jobs and billions of dollars.”

Since the fall of the Berlin Wall, which celebrated its 20th anniversary in November, the military spying that was a hallmark of the Cold War has been replaced in many cases, say the authors, by economic espionage—the theft of corporate technology and the stealing of government research. In the case of Russia, the authors write, “what began as small and intermittent theft of industrial research has now grown into a vast and destabilizing form of economic warfare.”

It is the Chinese, however, who are our “greatest threat,” according to Nest of Spies. As two Chinese defectors testified in 2007 before a U.S. Senate committee, there are more than 1,000 agents working in Canada. That same year, the head of CSIS told a Senate committee that up to half the time the agency spends on foreign espionage is devoted to cases involving spies who answer to Beijing.

Chinese spies ruffled Prime Minister Stephen Harper enough that in 2006 he took the unusual step of publicly denouncing Chinese industrial espionage in Canada. At the time, Harper’s undiplomatic outburst was widely criticized for jeopardizing relations with Beijing, but the prime minister may have felt the Chinese were getting a little too close for comfort.

A 2006 CSIS report alleged foreign spies were targeting federal departments. And then there was the case of Haiyan Zhang, a Chinese-born bureaucrat who was fired in 2003 from the Privy Council Office, a highly sensitive office that answers to the prime minister and Cabinet, and stripped of her security clearance after she was fingered by CSIS as a potential spy. While the PCO invoked “exceptional circumstances” to remove Zhang (a former correspondent with Xinhua, China’s state-run news agency) from the federal bureaucracy, a federal adjudicator ordered she be reinstated in a less sensitive job. She lasted two months before a second security probe sent her home—with pay.

Earlier this year, a government source confided to The Globe and Mail that “’the Chinese government sometimes seems to know more about Canadian government decisions than Ottawa announces publicly,” underscoring fears that Beijing is cyber-spying on the federal government. While refusing to call out the Chinese, Public Safety Minister Peter Van Loan acknowledged that “not a day goes by without somebody somewhere in the world trying to breach the government’s computer system.”

This is rich stuff. Unfortunately, Nest of Spies prefers to construct its case against China largely on the supposedly sinister intentions of the Confucius Institutes, a network of Chinese cultural centres, and Beijing’s persecution of the controversial religious sect Falun Gong. Chock full of spine-tingling innuendo, the book contains little proof. Are the Confucius Institutes a giant front for stealing technology? Must be—there sure are a lot of them and China does have intentions (surely evil) to expand its soft power. As for the overused case of the Falun Gong, it is not only unoriginal, but its incredibly one-sided and unquestioning portrayal does serious damage to the book’s credibility.

It is a shame that the reader will learn so little about economic spying in Canada from this book. Despite sweeping statements about the “legions of spies” that have infiltrated our undefended and naive shores, making us “pawns in a deadly game much bigger than ourselves,” there is very little detective work done here. Rather, the authors, eschewing sources (even anonymous ones) and cold hard facts, content themselves with heaping doses of supposition and innuendo that would do a gumshoe dime-novelist proud.

The tangled web begins with those nasty Russians, who, along with the Chinese, are the tale’s evil doers. That would be fine, I guess, if they could actually pin something on them. While the authors kick off the book with the broad assertion that post-communist Russia is run by a triumvirate of corrupt politicians, spies and mobsters, the majority of the 72-page first chapter dwells in the past, hop-scotching from a 1987 fire at the Russian consulate in Montreal to musings about the possible KGB ties of 1970s hockey legend Vladislav Tretiak.

A second chapter is dedicated to Paul William Hampel, the Russian spy who was deported in 2006 under what has become the much-maligned security certificate program. Marking the first espionage-related arrest in a decade, Hampel’s relatively expeditious exit (six weeks) stands in stark contrast to some half-a-dozen security certificate cases involving terrorist suspects that remain bogged down in years of court procedures.

In the case of Hampel, who lived in Montreal for 15 years using a fake identity, CSIS was able to maintain its veil of secrecy. For 33 pages we never find out what damage the Russian spy actually did, the details of which were apparently contained in a “Secret Proof” that was barred from being discussed in open court. Without the goods, we are left only with speculation surrounding Hampel’s periodic photography excursions to the Balkans and the banal interchanges with his defence attorney.

What the authors should have delved into, especially given Michel Juneau-Katsuya’s background as a career CSIS agent, is why the spy agency seems to be having so much trouble doing its job. CSIS has been accused of spectacular incompetence for its handling of security certificates as well as negligence in the case of the 1985 Air India bombing. The agency erased hundreds of hours of wiretap recordings of the bombing’s prime suspect, key evidence that contributed to the 18 years it took to prosecute the case.

The current bid to deport a handful of Muslim immigrants to their country of origins has not only cost taxpayers tens of millions of dollars, but also has tarnished CSIS’s already embattled reputation. In October, the courts quashed a six-year case against Moroccan-born Adil Charkaoui after CSIS refused to abide by court orders to disclose secret information. Charkaoui, like other terror suspects fingered by CSIS, is now contemplating a multi-million-dollar lawsuit.

Nest of Spies is replete with glancing references to the agency’s shorn budget and government’s antipathy to the organization. Agents and spy brass are alternatively referred to as bitter and floundering, amateurish, bungling and befuddled. At the same time, the agency is handcuffed by legislation: the old and outdated CSIS Act, which created the agency in 1984, and the more recent Canadian Anti-terrorism Act, which includes sections on espionage and is apparently unenforceable.

The authors make the revealing point that while in the United States, Great Britain and Australia there is an average of one trial per month of Chinese agents charged with economic espionage, Chinese spies have never been brought to court in Canada. Is it any wonder?

Canada could sorely use a thorough investigation into the manners, methods and costs of industrial espionage on our businesses and government. Unfortunately this spy tale raises more questions than it answers.