Conversations with Chinese Intelligence Officials

THE TIANANMEN‑SQUARE‑MASSACRE DEAL

by

A delegation representing Aeropspatiale, the French arms manufacturing

and trading company, arrived in Beijing in on a very warm and humid morning

in mid‑May, 1989, to carry on final negotiations for the sale of helicopters to

People's Liberation Army of China. Discussions regarding the purchase of four

specially‑equipped Dolphin helicopters for use by the PLA Navy, began in

earnest when the Aerospatiale delegation met with representatives from Poly

Technologies, the principal arms‑dealing agent of the PLA, on Friday morning,

the 24th of May.

We had recently purchased 24 Gazelles from Aerospatiale for the Army

Aviation Corps and several Super‑Frelon helicopters for the Navy and

augmented these purchases with the acquisition of a squadron of Sikorski

Blackhawks from the United States, So, in one sense, for us, this was simply ongoing business.

But in another sense, the timing could not have been worse.

When we received the fax at Poly Technologies, where I was working, on

the last day of April informing us of the impending arrival of the French

delegation we were not at all sure that they were serious. Were they merely

going through the motions or in the midst of this crises were they actually

expecting to negotiate a deal?

When I read the fax, I couldn't believe my eyes. I remember saying,

`What? This isn't true! Is this a joke? Can you be sure that the delegation is

coming and that final‑stage preparations can take place in this pressure‑cooker

atmosphere?. This is impossible!' Very simply, it was unbelievable."

But the top Chinese naval officials had decided earlier in the spring that

it badly needed the four Dolphins because of the potential dangers involved in

occupying and holding some of the Spratly(Nansha) Islands in the South China

Sea. In March of 1988 the Chinese and Vietnamese navies fought a brief battle

over the islands. The Spratlys are often on the minds of the naval planners

because the international problems there were potentially explosive. Several

countries including the PRC, Vietnam, Taiwan, the Philippines, Malaysia and

Brunei claimed the islands. The Navy, as a result, for a long time has been

concerned about building up its ship‑borne helicopter forces to support and

defend Chinese claims in the Spratlys.

By the time the French delegation arrived in Beijing, the streets of the

city were in near chaos. Ever since the death of Hu Yaobang on April 15th the

city had been swept up in demonstrations and increasing turmoil. On April

18th, 6,000 students from Beijing University marched to Tiananmen Square and

sat down in protest in front of the Great Hall of the People. The Democracy

Spring had begun. Television cameras from the West transmitted the events in

Bejing around the world and as a result the attention and concern of much of

the world turned gradually to Beijing and the activities of the students and their

supporters among the workers and in the government . Martial law was

declared at 10:00 am on May 20th and one hour later satellite transmissions

from China to other countries was stopped. On May 23rd, one day before

negotiations with Aerospatiale began, more than one million people took to the

streets in Beijing to protest the martial law declaration.

There are 72 critical intersections leading from the outskirts of Beijing to

Tiananmen Square. Block those intersections and you stop all traffic in the

city. Block the intersections and no army can get to Tiananmen Square. By the

end of May, that had happened. But it wasn't students who blocked the

intersections. It was the workers of Beijing ‑‑ the common people.

I saw the crisis quickly intensify. The workers who

blocked the intersections knew exactly what they were doing and their efforts

were loosely coordinated. I believe that is what frightened the government

most. They could deal with the students and the foreign press corps. But not

the common people, they could not face down all those people. And there must

have been, I would estimate, at least 100,000 people taking part in the effort to

bring traffic to a standstill."

Each night the working people of the city drove buses, taxis and cars into

the middle of the 72 intersections. They pulled concrete dividers from the

middle of the streets across the traffic lanes and kept them there throughout

the night. There were 300,000 troops around Beijing on May 19th. But they

had trouble moving into the city. Truckloads of troops that drove into the city

during the day found themselves stranded in the street at night. The People's

Liberation Army was trapped by the People and they sat parked, helpless, and

frustrated along side streets.

"The people were heroes from that point on. This is the great untold

story ‑‑ the story of the people, the common people, not just the students."

But how long could this continue? By the time the Aerospatiale

delegation arrived, I felt something very serious was about to happen in the

streets at any moment. You could sense it, you could almost feel

it in the air. Troops ringed the city and were concentrated at several points

near Tiananmen Square. But there was no way for them to get to the students

in the square except by crashing through those barricaded intersections."

The people warily watched the troops. The troops and the government

warily watched the people. The troops didn't move during the day when the

students and workers and newsmen could clearly see what they were doing.

They dare not. And at night after 7 pm, they couldn't move either.

The people at the barricades stayed up all night talking and arguing

about the future of the country. They talked, they complained, they laughed.

This is the first time since 1949, some of them said, that they were really free,

that they could do or say whatever they wanted. "They could openly criticize

the government for the first time. And they were not afraid any more. Each

night I rode my bicycle from our offices in the Citic building to my apartment.

We were working late on the French contract and so I seldom left the office

before dark. I stopped at these intersections and listened to the speeches and

the conversations and I saw the glow and the confidence on the faces of these

common people. I felt a thrill and a pride in being Chinese that I had never

before felt. I fell in love with these nameless heroes. And I felt ashamed of

what I was doing every day at Poly Technologies."

"In this atmosphere, we negotiated with the French for the purchase the

Dolphin helicopters that the Navy insisted they so desperately needed.

"Later when we told our American and British friends what had happened

and explained the timing of the deal to them, they just laughed. And they said,

'Oh, sure, that's the French!" "That's the French,' they insisted. 'They're just

money oriented. Politics and ideals count for nothing with them.' They were

never surprised at what the French did. Yet, there were time, I know, when

they behaved the same way.

"The French have been the principal contractors for the Chinese military

in the past several years. One of the things that makes negotiating with them

relatively easy is that the they know how to do business in China. They know

where the power really resides in China. They know which buttons to push and

when, which officials are approachable behind the scenes and which are not.

They are the experts in this field. So there was seldom any major problem with

them in that area. And they had few problems clearing transactions with their

own government. Under their defense ministry, the French had established a

supervisory group that was known to us simply as the DCN. The organization

supervises France's defense‑oriented research and production for export. They

also assess and analyze the needs of potential foreign customers. It's a very

powerful organization and many of the famous generals and admirals serve in

DCN following their retirement from the military.

DCN maintains an office in Beijing and has representatives present in the

city at all times. Aerospatiale also has a permanent office in Beijing.

The Aerospatiale delegation of about fifteen people was led by a Mr.

Samuel, the director of the overseas marketing division of the company. The

other members of the group were experts either on technical specifications or

on price quotations or on commercial aspects.

"We Chinese who took part in the negotiations were worried, but we

didn't talk openly about it. Who was not worried at that time? I watched the

drama unfolding daily in the streets. I was for the students, but I couldn't leave

work. I couldn't go to the Square to encourage them and talk with them. I had

to prepare the contracts for the signings. I had to work very hard in those last

days of May and the first days of June ‑‑ often putting in eighteen hour days at

the office.

The French delegations customarily stayed at the Great Wall Hotel,

which has an excellent French restaurant. They normally drove from there to

Poly's offices at the Citic(China International Trust and Investment

Corporation) building on Jianguomen Avenue, a trip that previously took only

20 to 40 minutes by limousine and taxi. But in late May many of the taxi drivers

of the city were on strike and the streets were often blocked and impassable.

Having been warned of this, the French delegation registered in the Beijing

Hotel on Chang'an Boulevard adjacent to Tiananmen Square and also at the

Jing Lun Hotel(Beijing Toronto ‑‑ a Chinese‑Canadian joint venture) within

walking distance of the Citic building.

The French, no doubt, saw the turmoil in the city as they made their way

from the airport to their hotels. They knew what was going on outside, but it

appeared they were completely unmoved by it. They just didn't seem to care.

There was business to be done.

"On May 25th, the second day of the negotiations, PLA helicopters

starting flying over Tiananmen Square to observe and photograph the students

and to drop pamphlets. We could see them from our office windows like giant

wasps circling and hovering ominously in the distance. It was just incredible ‑‑

they were the same Gazelles sold to us earlier by Aerospatiale!

"We had imported 24 of them early in 1988. They had been purchased

especially for China's newly formed Army Aviation Corps, stationed at a

specially designated airfield in Tong Xian County, a remote suburb of Beijing.

It was from that airfield that the Gazelles took off and flew over Tiananmen

Square. Several of the pilots on those Gazelle's owed their expertise at

handling the craft to the fact that they had been well trained in France. The

French also sent pilots and technicians to China to train crews for flying and

maintaining the Gazelles.

"One of the selling points of the Gazelle is its simplicity. It is very easy

to handle and is quite small with only enough space for a pilot and co‑pilot.

Yet it can be equipped with anti‑tank guns, rockets or even missiles if that is

required for the mission. Poly Technologies purchased them for the PLA

theoretically for tank killing purposes. But on the 27th of May they, quite

obviously, were assigned another task.

"I can tell you that more than once I looked out the window and saw

those helicopters make a wide turn and pass over our building before racing

back toward the Square and I wondered, `My God, what have we done? And

what are we doing here now?'

"And so from our windows, we watched the Gazelles hovering ominously

over the square. It was very clear, like watching a horrifying movie. My God,

they flew so low, you know, and sometimes made their passes around the Citic

building and they came so close we could see the air force insignia on the side ‑

‑ `August 1st, 1921,' the day the army was formed in Jing Gang Mountain in

1921. On one unforgettable occasion I could even glimpse the faces of the pilot

and co‑pilot.

But the French were not to be distracted during the negotiations. They

knew the Gazelles flying over Tiananmen Square to observe and harass the

students had been manufactured and sold to us by them. And far from being

embarrassed by that fact, they seemed rather pleased by the expertise with

which the pilots now handled the aircraft. I watched them nudge each other

once as the helicopters flew nearby.

The PLA Navy also sent their own representatives to the negotiating

sessions with Aerospatiale ‑‑ in civilian clothes, of course. In China, when

foreigners are present at an event, military personnel must wear civilian attire.

The government does not like foreigners to feel that the military chooses to

deal with them directly, even when they do. But the military quite clearly was

represented directly at these negotiations.

The head of the Chinese military delegation was Mr. Xie Tie‑Niu(his

name means "Iron Ox"), a navy captain, which is equivalent to an army colonel.

He is the Director of the Naval International Procurement Division and his

presence was essential at the negotiating table. He was accompanied by two

other officers from his division.Captain Xie was newly promoted, and

fairly young for his rank ‑‑ in his mid 30s. He had become very influential

within the military and got along well with foreign businessmen. He is a

striking figure ‑‑ unusually handsome and quite dashing in his confident

gestures and appearance. His soft, clear skin, rosy cheeks and thick, perfect

patent‑leather hair ‑‑ indicate that he was from a wealthy, well‑connected and

powerful family.

Unlike most of his fellow officers, Tie‑Niu doesn't smoke, but he is

devoted to social drinking and womanizing ‑‑ yet not to the extent that either of

these entertaining diversions cause personal or professional problems for him.

He is an excellent dancer, and unabashedly romantic. Women adore him and

he adores them. He is the envy of many of his young fellow officers since he has

several mistresses ‑‑ all of them are strikingly beautiful. These women are,

moreover, each independent individuals ‑‑ some of them even married ‑‑ and so

Tie‑Niu is proud of the fact that he never has to concern himself with

supporting them. He enjoys life and life has been good to him. He has a deep,

resonant, commanding voice and is seldom not the center of attention either on

the dance floor, at a cocktail party or at the negotiating table.

Another military negotiator at the meetings was naval captain Xiao Bo

Ying, son of the late and very influential marshall and founder of the PLA

Navy, Xiao Jingguang, the first naval admiral and the first commander in chief

of the PLA Navy. Admiral Xiao, who had actually joined the Communist Party

earlier than Mao Zedong, had been handpicked by Mao to head the Navy. He

died three years ago. His son, Bo Ying, who basks in the glow and the

influence of his father's career and power, is with the Technology and

Equipment Division of the Navy and is in charge of aviation aspects of the

Navy. He was present at the negotiations because he works in the helicopter

sector of his division.

On the civilian side, I was present at some of the negotiations,

representing Poly Technologies. Also present at the final stage was the general

manager of the company, He Ping, son in law of Deng Xiao Ping and He

Datong, vice president of the company.

But the individual primarily in charge of the project for Poly and the one

I spent the most time with during the negotiations was Mr. Chun Kungmin, an

unusually hard working and intense man. In addition to being a top‑notch

negotiator, Mr. Chun also an eccentric. He is in his early 40s and of medium

height. His wire‑rimmed glasses along with his constant pensive demeanor gave

him the appearance of an intellectual. Originally from Guangdong Province,

his absolute devotion to business was never quite concealed by the occasional

flash of an official smile. Twenty years as an Air Force officer had somehow

taught him to look serious even when he laughed. He wasn't completely devoid

of a sense of humor‑‑ he just looked that way. He was the perfect arms

negotiator. His thoughts were utterly and absolutely indecipherable from his

expressions. He drank only on ceremonial occasions and then only as much as

was absolutely required. He did not enjoy music and the marchers in the street

were merely an obstruction to him, a natural phenomenon that increased the

time necessary for him to get to work. He had no vices I could recognize. He

didn't smoke cigarettes and he didn't seem to be interested in women either.

He was married, but he never spoke of his wife. I don't even know if he had

children. He never mentioned them. Sometimes during the negotiations he

stayed in the office overnight typing up paragraphs of a letters or documents

without appearing tired in the morning. Not surprisingly, he was a devotee of

physical fitness. He kept his business attire in a locker in the office, and at the

end of his day, he'd slip into shorts, sneakers and a tee‑shirt and then run

several miles down Jianguomen and Chang'an Avenues ‑‑ often in the dark ‑‑

before picking up his bicycle or catching a bus home. Then he'd run back to

work the next morning, shower at work and crawl back into a suit. He was

known to staff at the office for this unusual routine. In the winter he not only

ran outdoors, but he swam in unheated open‑air pools. The weather didn't

phase him. He ran back and forth to work in the coldest winter snowstorm or

on the hottest summer days.

He told me once that he got into that habit of running great distances

when he was serving in the Air Force, where he had been the chief French

interpreter for ten years. He could never break the habit. And so, although he

still lived in the Air Force Compound in a Western Suburb of Beijing, there was

never a problem of Kunming not showing up for work because of a breakdown

in the public transportation system or the taxi service. Should the bus system

fail, he would bicycle and run to work and show up as eager to work as those

who walked or bicycled only a few blocks.

So altogether about six people from the navy were present, in civilian

clothes, along with five people from Poly Technologies. The French had about

15 representatives present, for a total of 26 negotiators ‑‑ a relatively large

group.

On the first day of talks we compared notes and exchanged our views on

preparation of the final documents which would lead to a formal contract. The

discussions took place in two groups, one for technical aspects of the sale and

the other for commercial aspects.

The naval representatives appeared to believe right from the start that

they were in a favorable bargaining position with Aerospatiale, and they really

pressed the French, saying that they intended to move ahead expeditiously with

the purchase, they needed the Dolphins, and the only thing holding back an

agreement was the price quotations by the French. So they urgently requested

further concessions on prices. But the French were unimpressed by this

position and held firm day after day. They insisted absolutely that there could

be no further reductions in their quotations. My suspicions about this position

proved, in time, to be correct. I had dealt with the French previously, and I

believed that informal talks had taken place elsewhere prior to these formal

negotiations. And I learned in time that indeed, through their special

intermediaries, the French had contacted not only the top officials at Poly but

also the top naval admirals, who were not present at these meetings. The

admirals always played their games in this way, making promises and deals in

other rooms that we never knew about. They were a shadow power when it

came to negotiations with the French, always felt but seldom seen. And

because of this the French, knowing what the final deal would be, invariably,

could stand firm on this or that position. The French intelligence system was

excellent. They knew everything about our situation. They had learned before

negotiations that we had $US45 million in our pocket and that we had to spend

it. They knew also that no matter how hard we pressed them they did not have

to give in because they also knew that we absolutely had to buy the helicopters

and to spend the money before the end of the year. If we didn't, we were

obligated to return what was left of the financial allocation back to our

superiors, the General Staff, and then there would be no profit at all for Poly.

The General Staff didn't really care how much we spent ‑‑ and the French knew

it, but we didn't know that they knew this. We at Poly always told the General

Staff how much we needed and they allotted us the money at the start of the

year. And so the French knew everything. And they knew that if they made the

best bargain possible for themselves, a share of the profits would then be

channeled to the admirals of our navy and could ease the way for future deals.

Any deal on our terms would channel profits to Poly Technologies and make

future negotiations more difficult.

"The naval officers at the negotiations believed, apparently, if they

pressed the French and at the same time showed determination that, as in the

past, the seller would make some concessions just to ease the deal through.

This is a common practice. And the guys from the Navy knew that. But what

they didn't know was that the French knew what their position was and knew

there need be no concessions. I knew what was going on from the opening

negotiating session. I had been through this with the French before, several

times. By the way they stuck adamantly and confidently to their original

bargaining position, I could tell that the fix was in ‑‑ an agreement had already

been arrived at behind the scenes. We were just going through the motions

while the real substance of the agreement had been worked out elsewhere.

"There were leaks, important ones, at the very highest level of the navy.

And, as always, the French knew everything. And so on the one hand we were

saying to them, `If you don't make further concessions there will be no deal.'

And they knew this was just bullshit. There would be a deal, whether they made

concessions or not. So there would be no concessions

"The top navy brass had been in touch with the French, through their

intermediary, and made their own agreement. And, as always, they had been

given special consideration ‑‑ had been bribed ‑‑ I had seen this before, too.

But their subordinates were clean, the ones at the negotiating so seriously at

the table each morning.

"Even without their behind‑the‑scenes maneuvering, I felt uneasy

negotiating with Aerospatiale in the first place, I can tell you. I mean that we

knew full well that products manufactured by the French are cheap,

undependable and poorly manufactured. The quality is simply inferior. And yet

we have signed so many contracts with the French. Why? The answer is easy:

their contacts and the special consideration given the top brass. It's that

simple. The French were the number one Western arms merchants in China

not because they had a good product but because they had learned how to do

business with the Chinese much better than their competitors, the Americans

and the British. The Americans simply are not good businessmen in China and

the British, well, they are even worse than the Americans.

"What is the problem, as I see it, with the Americans and the British?

Well, they are just too honest, too sincere, too naive when it comes to China.

Maybe their China watchers and academic writers have misprepared them. The

French never had that problem, never fell into that category. And so before

they headed to the negotiation table they knew exactly what our position and

our arguments would be.

"So in the Citic building the final negotiation phase was not very

meaningful except in technical terms. Aerospatiale still had to explain to the

customer how to interface their product with other products, system

coordination and system integration and so on, because we would be putting on

board the Dolphins some materials made in China. Part of the avionics are

from China, for example. So the French did spend a lot of time explaining

things like that to us, but that is hardly negotiating.

"Sometimes during the talks I looked up at the face of my section director

or the deputy manager or even at the general manager of the company. Most of

the time they were somber and tight‑lipped. When they altered their expression

and smiled, they smiled like robot might smile. They'd lost the color in their

faces and it seemed they lacked any genuine emotion ‑‑ they had neither

enthusiasm or sincerity. They smiled when they needed to smile. They laughed

when they were supposed to laugh. They exchanged greetings when it was

absolutely required. They controlled themselves at the meetings, I thought,

beautifully, considering what was going on outside in the street and in the

square.

"Inside our comfortable air‑conditioned offices on the fifth floor of the

Citic building ‑‑ which is commonly referred to in Beijing as the "Chocolate

Building" because of its rich brown color ‑‑ it might appear that nothing of

consequence was going on outside. It was incredible. None of us were in the

mood to do business. Yet everyone smiled dutifully. I didn't know what was

going to happen. I certainly thought this was the worst time imaginable to be

doing arms dealing for the PLA. Like most other employees of Poly and as well

as the employees of other companies in the Citic building, I wanted to be in the

Square or in one of those massive parades that passed by on Jianguomen

Avenue. But I was needed to examine and translate technical specifications

from English into Chinese. So every day I did my job. I sat through the

droning negotiations and the discussions of so many American dollars ‑‑ dollars

are the currency used in the international arms trade ‑‑ for this and so many

technicians to be trained here or there at this time or that. And whenever

there was a lapse in the conversation I just gazed down at the table, thinking

about what was happening outside, forgetting for the moment what was

happening ‑‑ tuning out the voices in the room. My mind as well as my heart

wandered again and again to the students and the workers the streets and the

square.

"I kept thinking, wondering what the solution to this crisis ‑‑ this uprising

‑‑ might be and what it might mean for the Communist party. I imagined on

some days that it might be the end of the Communist party in China. Deng and

the party might be actually be finished! And so I had almost convinced myself

at the end of May that the Communist party of China was about to make its last

gasp ‑‑ it had outlived its usefulness. I suppose the mood of those crowds at

night in the intersections and the songs and cheers of the students in the street

had affected me and I was thinking, like so many other Chinese at the time,

with my heart rather than with my mind. I should have known better. I should

have known better!

"Since the intersections were blocked at night, it was difficult for me to

get home after work. I had to ride my bicycle slowly around the city and walk

part of the way. Some evenings I chose to stay in the office rather than go

home, and on those nights I slept on a standby bed. Those among the French

delegation who were staying at the Beijing Hotel also found it difficult to get a

ride back to their rooms and they were forced to walk since even taxis could not

navigate that short distance at night.

"During the morning of Monday, May 29th, when we were in the final

stage of negotiation, we heard some unusually loud noise from just outside in

the hallway. When we stepped outside to see what was happening, we found a

group of employees from other companies who were sympathetic to the

students. They had learned that the helicopters, circling over Tiananmen

Square and then flying over our building were purchased and imported through

Poly, they leaked this story out to the students, and a lot of employees then

mixed with the students and stormed our offices. They came right into the

offices and the hallways on the fifth floor and belligerently questioned and

accused anyone they could find. The guards in the lobby had lost control and

couldn't stop anyone from coming into the building at that time. The

receptionists told us that several times groups of people rushed up to the

reception desks and swore at them and threatened them. When they found us,

the first thing one student shouted at me was, `WHAT KIND OF FUCKING

COMPANY ARE YOU, ANYWAY?' I said nothing but simply stared back at

him. He was shaking with anger. Others came out of the offices to see what

was going on. And the demonstrators and protestors continued to shout at us.

They denounced anyone they could find. When someone tried to walk away

they would actually grab them and ask, `What kind of company are you? Do

you know what you are doing? You are spending China's treasure, her hard

earned foreign currency to buy shit like this, like these helicopters.'"

"Many of us were embarrassed and we really didn't know what to say. We

just didn't know what to say. We weren't afraid at those moments, but we were

profoundly moved. For the first time we stopped to think about what we had

been doing. We knew that the French had sold us the helicopters and that

those same machines were indeed now flying over the students and that at that

very moment we were doing business with Aerospatiale again and spending

China's foreign currency for more weapons. What could I tell them? That we

never thought the helicopters would be used against students? Would that

answer have satisfied them?

"The demonstrators made a lot of noise and threw paper on the floor, but

that was all. I'm sure they never knew that we were not unsympathetic toward

them.

"During the first three days of June things were getting out of hand in the

office. Employees from other companies in the Citic building and other groups

of people ‑‑ including students and their supporters ‑‑just came in off the

streets, marched into the offices of Poly and tried to cause trouble. The security

guards assigned to the lobby seldom showed up anymore and the whole building

was virtually unguarded. Anyone could walk in. And they did.

"Some employees of other companies in the building changed their

attitudes toward us, too. There were several international companies in the

building, including American, Yugoslavian and West German and a couple of

Chinese business, also. And now the topic of conversation among those

employees was our company. When we were approached on the elevator or in

the lobby they would say things such as, "We always wondered what kind of

company you were. In the past we didn't know that. But now we know what you

guys are doing. And it stinks!" I personally experienced that sort of exchange

several times. Whenever the elevator door opened onto the fifth floor those

inside glared at us or talked about the company loudly, firing out profane

epithets as though we weren't really there. They said the meanest things about

us ‑‑ things that were true. And they glared at us with accusatory and

disapproving looks and tried to stare us down. At other times when we were on

an elevator with them they would be absolutely quiet and refuse to exchange a

simple perfunctory greeting or even to acknowledge our presence. We had

become pariahs in our own office building.

"The company officers immediately reported these incidents to the

General Staff of the PLA of course and the General Staff made a decision.

Later that summer, after the massacre, Poly was moved from the fifth floor of

the Citic building to the seventeenth.

"Judging from my talks with one of the French delegation members I

learned that they were not unimpressed by what was happening in the streets

during the talks. They could see and hear; they were watching, too. But they

cherished one thing, above all else. They believed that no matter what seemed

to be happening at the moment, in the end the Chinese government was going

to control the situation. Nobody is going to change the course of communism in

China, they believed. Not the students in the Square and not the workers in the

streets. They believed that those in power would remain in power. And,

besides, even if they proved to be wrong and Communism collapsed, no matter

who stayed in power or came to power was going to need a strong army to

control China. And the only way of way of arming the military with modern

weapons was through foreign assistance. They were very confident of that. So

there would always be a need for Aerospatiale, no matter who ruled China.

"So the French were confident of themselves and of the government in

Beijing. And when I saw them each morning, after they'd walked or ridden to

the Citic building, I noticed that the expressions they had and their attitude was

not that of the other foreigners wandering around Beijing at that time.

Foreigners on the street, I thought, were sort of nervous and in a state of

heightened excitement. They were looking around ‑‑ and with good reason ‑‑ to

see who might be following them. But not the French. Never the French.

"That is why, in the end, the signature itself on the Aerospatiale ‑ Poly

Technologies contract was more significant as a matter of timing rather than of

actual substance of the agreement. The French wanted to demonstrate that

they could do business, make deals and come to agreements and sign contracts,

and give out favors, even in the most chaotic of times.

"Despite the difficulties and interruptions, on June 2nd everything in the

Aerospatiale agreement was in place. The French had not budged on price, we

had conceded everything and we were ready to make the purchase and to sign

the contracts. The signing ceremony was arranged for the next day, June 3, a

Saturday.

On June 3rd, a massive crowd of demonstrators marched by and there

was virtually no public transportation and no policemen in the streets.

Everything seemed to be spinning out of control ‑‑ everything but our

negotiations with the Aerospatiale. The completed contract between

Aerospatiale and Poly Technologies arranged for the sale of four Dolphin

helicopters for $US45 million. The contract called for two of the helicopters to

be equipped with advanced avionics systems provided by a major subcontractor,

Thomson CSF. The hardware and software package was to include S12 dipping

sonar systems, acoustic signal processing capabilities, target display, fire control

and an advanced C3I system. The helicopters were also to be capable of

carrying anti‑submarine torpedoes.

"I didn't finish work preparing documents for the signing ceremony until 2

o clock in the morning on June 3rd. The ceremony was postponed until 3 that

afternoon. On the morning of June 3rd, there was a feeling in the company ‑‑

judging from the situation in the street and in the Square ‑‑ that time was

rapidly running out. The principal officers of the company who were who were

militarily well connected were no doubt aware of what the army had been

ordered to do later that day. They knew! It was going to be close, they knew.

They had to get business done and get out of the building and off the streets.

As a result, they were concerned with wrapping up our business with the French

as quickly as possible. At the same time they dare not communicate their grave

concern to the French or to others of us in the company. They were unable to

conceal their anxiety, however, but at the same time could not tell us why they

were so rushed. The atmosphere in those final hours on Saturday,

consequently, was one of intense yet unspecified foreboding. There was

something ominous in the air. The Poly executives and the naval officers

wanted to get the contract signed and complete the deal before the killing

began that night.

"Student marchers had come by our building almost daily. And then on

June 2 and June 3 it seemed that everyone in the city was in the streets and I

watched the biggest crowds I had ever seen before in and around Tiananmen.

At least one million people poured out into the streets on those days.

"As those crowds gathered outside, I prepared many of the final

documents for signing. During the night of June 2nd and the early morning of

the 3rd, we printed them out and laid them out for the signing ceremony. All of

them had to be translated into English, which is the lingua franca of the arms

trade.

"That morning the building looked almost abandoned, like a ghost

building. The security guards did not show up for work ‑‑ indeed, hadn't been

there for several days ‑‑and workers in most of the other offices were also not

at their desks that Saturday. In fact, not all of our Chinese staff showed up that

morning because they simply couldn't make it to the office. Kunming, of

course, had run to work, and all of the major officers were present for the

signing.

"The French arrived at 3 pm ‑‑ they had walked to our office because no

taxis were available ‑‑ and we showed them to a room with a long table which

we had draped the national flags of France and China. Our front‑desk

receptionists, two pretty young girls, were recruited to serve champagne, which

was a must for an occasion like this.

"He Ping, Mr. Samuel and Xie Tie‑Niu stood side by side and smiled for

our photographer. Yet this was an unusually solemn ceremony since every one

of us ‑‑ even the French ‑‑ knew what was happening outside. Everyone was

somber and unsmiling unless it was absolutely required to appear otherwise.

When we made a toast and said "Gen Bei" then people would flash a smile for a

moment, but it was forced, and it was over in a moment.

"And when we were finished, when I saw the contract signing, all I could

think of at that time was that I really hated the French, from the depth of my

soul I hated them. I had nothing but complete contempt for them. The French,

my God. How could anyone respect for them. I'll never have a friendship with

them again, never in my life. I'll never speak to them again. They are filthy.

"At five o clock the signing ceremony was completed. Then there was an

unexpected request. The French expected that as usual following such

momentous events, there would be a banquet to celebrate the completed

agreement. They asked He Ping where the banquet was to be.

"The French usually preferred to celebrate at Maxim's, an elegant and

expensive French restaurant, for their signing banquets. Most of us at Poly,

though, never liked the place because we found French cooking to be nearly

inedible. But this was an unusual night and Maxim's was far away and would

require driving. And when they suggested a banquet, He Ping immediately

suggested that we hold it right in the building, on the 28th floor, at the

Windows of the World(Shi Jie Zhi Chuang) a superb Chinese restaurant ‑‑ many

people insist that it is the best Chinese restaurant in Beijing. The French

insisted that they pay for the banquet on this evening, so He Ping telephoned

the manager of the restaurant and reserved tables for 30 people.

"There are A and B and C levels of banquets at the Windows of the

World, and since the French were paying and price was therefore not an issue,

He Ping ordered the A banquet. Everyone present at the signing ceremony,

including the receptionists, was invited to attend. Since this was very short

notice, and it was already late ‑‑ about 6:30 pm ‑‑ the banquet was not as formal

as such affairs usually are. There was merely a brief rest period and then we

took the elevators to the top of the building. We even called the girls at the

front desk and the drivers, and reserved two tables for them in the restaurant.

"Our party that night occupied only about five tables but we asked that

the restaurant be illuminated by candlelight for this special celebration. The

manager complied with our request and glass shaded candles were placed on

the tables while the overhead lights were dimmed. I noticed that the there were

few waitresses in the restaurant that night. We were told by the manager that

many of his workers were unable to get through the streets to work. The

service was consequently agonizingly slow and for a group of people in a hurry,

this was unfortunate. He Ping wished to complete the banquet as quickly as

possible and at the same time not appear discourteous to the French hosts.

"Shark fin soup, the specialty of the restaurant was served as the opening

course, and was accompanied by a dozen bottles of the finest French

champagne available. While we waited for each course that evening, there were

scores of toasts and the champagne was quickly consumed. There was plenty of

time to talk between the courses and the toasts. And more time to worry,

actually.

"From the Windows of the World we could see out over the entire city.

There were few other guests in the restaurant that evening, obviously because it

was difficult to travel outside and very few of Beijing's businessmen were in a

festive mood.

"The dignitaries from the negotiating sessions ‑‑ Kunming, Tie‑Niu, He

Ping, Bo Ying, Samuels and others of high rank sat at a head table. They

appeared to be involved in serious conversation during their eating and

drinking.

"As the sky darkened outside, some of us looked out the windows toward

the illumination in the distance that we knew was Tiananmen Square. We

couldn't resist it, of course. Those of us from Poly talked among ourselves

about events outside. After all, we could still speak freely about whatever we

liked. The French representatives at my table, who had to communicate with us

through a translator, wanted to know what we thought was going to happen in

China in the coming weeks and years. But they were polite enough not to ask

pointed questions and not to press for answers. Some French representatives

indicated, during the dinner, that they were actually more pleased with the

negotiating process itself at this critical and pivotal moment in China's history

than with the actual specifics of the contract. It indicated, they said, that the

Chinese and the French could do business under even the most harrowing of

circumstances. I recall, in particular, one individual stating that they had been

successful in breaking through the `Chinese ice' in the past several days and

sealing an important business deal. It proved, he said, that the events in the

streets need not intrude into the talk of the negotiating room.

"The Chinese around the table shared their worries and concerns,

predicting what might happen and what the future might be like. Of course, we

were wrong in our predictions.

"We didn't say out loud what we all knew ‑‑ that the Communist regime was

basically against the will of the people. All you had to do was to look at the

numbers of people in the streets. You saw the banners and the slogans every

day. Everything looked white in the streets from the shirts and the banners of

the marchers. And along the sides of the streets were small camps for

university students from other provinces. They could not get into Tiananmen

Square because the Square was restricted to students, primarily, from the

Beijing area. Sometimes they slept in buses that never left their parking places.

Some stood on top of the buses during the demonstrations waving flags. And

they stood around the army trucks that made it into the city and tried to talk to

the soldiers, who were stranded in the middle of this restless sea of people and

who were obviously frustrated and unhappy and in no mood to talk to anybody.

"One of the officials of our company, I recall, asked, `Why should I be

worried? If the Party is finished, then half the people will be very happy. And

if the party is not finished, another half of the people will be happy.' `And if

China is to be more democratic,' another asserted, `then there will be perhaps a

better life for all.' That is what we dwelled on ‑‑ the impending death of either

the democracy movement or of the Communist party. Everybody could not win.

One side or the other would have to triumph and the other back off in defeat.

"Out of politeness, we turned again and again to small talk and asked the

French, through our translator, how they enjoyed their stay in China and what

monuments and tourist attractions they had visited and enjoyed most. We tried

to avoid politics with them despite their persistent questions. But, with each

other, we shared our concerns, because we all could see what was happening.

"He Ping and Mr. Samuel made their final toasts at 10:30. I noticed He

Ping looking at his watch with some concern as the night wore on. When he

had completed his toast, the banquet was finished and we prepared to leave.

"A few minutes later we were on the elevators returning to our fifth floor

offices. The French guests and a few of the Poly Technologies officers went

down first and the rest of us followed in shifts on the small elevators. We

stopped for Frenchmen to retrieve some of their papers and cases on the fifth

floor and then escorted them to the lobby. I noticed that there were cars from

the French Embassy waiting for them in front of the Citic building. I thought

this was unusual. They were then driven away in the direction of the French

Embassy rather than toward their hotels. I thought later that this perhaps

indicated that they had some idea of what was going to happen. As I watched

them leave, I thought just for a moment that I detected lightening flashes in the

western sky and guessed that it was going to rain and that I should hurry home.

"As I then walked to retrieve my bicycle from behind the Chocolate

building, I saw Kunming almost silently come out into the dark street in his

running shorts and sneakers and pad off into the darkness. Other employees of

the company scattered in several different directions heading home. There

were no taxis or cars moving about and so very little noise in the street at that

time.

"As I rode my bicycle home, in a general northwest direction, I noticed

that the situation on the street was still tense. I passed many military vehicles

parked along the side streets, loaded with silent soldiers. Yet, curiously,

nobody seemed too worried about them and nobody I talked to thought they

would shoot anybody. When you saw the trucks driving around during the day

you weren't afraid because the general feeling was that the PLA might do

something dramatic but certainly they would never shoot anybody, not

indiscriminantly, certainly. I think the general anxiety came from the belief

that something had to change, something had to give, and nobody knew what.

But I must say now that the silent trucks sitting there in the dark were not a

good sign. The soldiers inside were so quiet, they weren't even talking to each

other. Some of them were stranded and some of them were lost, we thought.

And all of them seemed, when you saw them in the light, unhappy to be in

Beijing.

"As I made my way home I found that there was some traffic on the

street, but the main intersections remained blocked with buses and taxis and

concrete dividers.

"I took a roundabout way home. Despite my long day and staying up most

of the previous night, I wasn't very tired. I rode around Beihai park.

"Crowds of people were gathered throughout the area. They were talking,

smoking, laughing. Predicting the future. Sometimes there were only a dozen

or so gathered, sometimes more. They would be standing in a circle, arguing or

listening to someone speaking. Some insisted that Communism was finished.

And nobody believed that army was going to shoot anybody. I even stopped my

bicycle and listened for a time to one of the more animated discussions in the

street. There was a sizable crowd of people there and an army veteran was

addressing them. I remember so clearly hearing him say, "The army may shoot,

but they will only shoot in the air if they do. Don't forget, it is the People's

liberation army and they will only shoot into the air, they will never shoot the

people."

"I wanted to believe him. But he was wrong. Within a very short time, of

course, the People's Liberation Army moved in and they shot anyone and

everyone.

"I was getting ready for bed when I heard what sounded like firecrackers

going off in the distance, near Mu Xudi. The noise continued and grew louder.

I looked outside into the sky and saw searchlights scanning the darkness. I

decided to bicycle toward Mu Xudi to see what was happening. As I

approached the intersection it looked like a huge fire was burning in the

distance. The sky was glowing red and there were constant flashes of what

appeared to be lightning. Then people ran by me in the darkness, some of them

cursing, some crying, some just silently running away. I got off my bicycle and

wheeled it beside me toward Mu Xudi. And as I got closer and closer I found

myself whispering over and over and over again, `Oh, no. Oh, no. Oh, no.'

"Most of us from Poly Technologies were unable to get back to work for a

week after that. So the timing of the contract signing turned out to be even

more fortuitous for the French, it seemed at first. On June 4th soldiers came

by and shot at the windows on the 27th floor of the Citic building. That floor

was occupied by a Yugoslavian industrial engineering firm called SNELT

Global Project Management and by AT&T. Some of the office windows faced

west toward Tiananmen Square and from those windows you could see clearly

what was happening in the streets. Some of the soldiers insisted later that they

saw snipers in the windows. What really happened, though, was that the public

security officers saw some videotapes they thought must have been taken from

the 27th floor of the building and they wanted to intimidate people and prevent

them from taking any pictures of what was happening from that advantageous

position on the 27th floor. Later on the soldiers shot out not only the windows

of our building but also some of those in the nearby foreign residential area

and the diplomatic compounds. The offices of the British and the American

army attaches, with the windows facing the west, were all shot out, too. The

soldiers said later that they thought films were being made from those

buildings, too.

"Yet within a surprisingly short time, business was back to normal at Poly.

And on the surface everything looked as it had a few months before the

massacre. But very few of us felt the same inside. We saw what had happened

and many of us had not supported the action of the army or of the military. Yet

nobody dared to speak out about it anymore. Nobody dared to express his own

opinion openly any longer. The atmosphere in the city and in the company had

changed dramatically. We felt it was dangerous to speak critically about the

government or the PLA. So we stuck to business. Poly Technologies was still in

business and arms deals had to be made.

"But what was interesting about that Aerospatiale contract was that later

on, because of the Tiananmen incident, the French government joined the

American government in imposing certain restricted economic sanctions against

China and consequently the contract failed to get approval of the French

government. So the system was never delivered and the contract not finalized.

French Aerospatiale worked closely with DCN to persuade the French

government to approve the contract. Of course, since high technology transfers

and military technology were involved, the French government had no other

choice but to not reject the contract for the time being. But in time, naturally,

it was approved because, well, you know the French. Business is business and

politics is politics.

"For several days after June 3rd, it was difficult for many employees of

companies in the Citic building to get to work. Public transportation had come

to a complete standstill. But when it was possible to get to work and the offices

in the building were again operating, almost invariably, the employees of the

other companies still spoke openly about what had happened. And many of

them became really infuriated about Poly Technologies. They not only had

seen the helicopters and they knew that we had purchased them. On June 4th,

Soviet made MI‑8 transport helicopter flew overhead towing a large aerial

speaker and broadcasting, `Jun Wei shou zhang zhi shi: Bu dui bu de shou zu.

Shou zu jian jue huan ji.'(Instructions from the Central Military Commission ‑‑

troops should by no means be stopped from advancing. If they are, open fire.)"

And down there in the street, an APC captured by some workers and students

opened fire on the helicopter with the anti‑aircraft machine gun, forcing the

aircraft to accelerate quickly and climb away to a safer altitude to avoid being

hit.

"The discussions in the lobby and in the hallways kept coming back again

and again to Poly Technologies. And then the harassment started all over

again. People on the elevators said that `Poly is in this building, and these

fucking guys have nothing to do with us. They are under no one's control.' And

several times these people would sort of wander into the reception area of our

offices and question the girls there, who didn't really know what was going on.

They sometimes spilled ink or papers and then shouted insults. Whenever an

officer came out of the office they stopped him and cursed him. They were a

continuing nuisance and they were embarrassing.

"And so we moved from the 5th to the 17th floor of the Citic building.

We had been planning this move for sometime, since we needed more office

space. And the events surrounding the Tiananmen massacre, the harassment by

others in the building, simply hastened the move. It was like Chinese politics.

Anything that happens in Chinese politics is never based solely on one thing.

There are usually many factors contributing to the final result. Harassment by

other employees in the Citic building was merely one of the elements ‑‑ an

important one, to be sure ‑‑ that caused our move up in the world.

II

THE WOMAN WHO LOVED ADMIRALS

"I first came across the unusual influence of the French arms industry

behind the scenes in China, ironically, during negotiations with a British

Aerospace for the purchase of the Lynx ASW (Anti Submarine Warfare)

Helicopter. That was in 1986. Now this should have been a standard business

deal with the British. Yet, in the end we didn't purchase the Lynx, even though

it was a much better system than the one that we purchased from the French.

This was really a stupid mistake on the part of the Chinese military.

"We were shopping around at the time ‑‑ the end of 1985 ‑‑ for a specific

sort of shipborne ASW helicopter. At that time, we had no shipborne helicopter

capabilities at all. So the British representatives came to Beijing and we

arranged for them to stay in a hotel near the Citic building. And then

suddenly, out of nowhere, the French approached us with their ASW system,

and so arrangements were made for them to stay in another hotel in Beijing.

We then began negotiations in earnest with both groups, examining what they

had in the way of ASW helicopters.

"The British Naval Attache in Beijing, Commander Farr, was involved

directly in these negotiations with us, indicating how important this was to the

British. Each side, moreover, was represented by a large delegation ‑‑there

were about a dozen people in each of the two delegations. Anything more than

ten to us was a big delegation. Each group included expert for sonar, one for

ASW torpedoes, one for avionics and so on. And each would make a

presentation and run through the technical aspects of their particular system.

Sometimes slides and videotapes were presented showing actually tests of a

system. Each of the delegations had seven business days to present their ASW

systems to us. Each morning we went to the meeting room of the hotel and

stayed usually until the evening. Each night there was a banquet, of course.

"On our side were representatives of the Army, Navy and the Air Force,

all, naturally, in civilian dress. I recall that during the presentations, which

were necessarily very technical, there was never any mention of price or of

money, but there was a lot of talk about us being 'old friends' and 'the

friendship between the two countries' and so on. The actual price surfaced only

at the end of the final seminar. Before you quote a price you have to show us

how far advanced your system is and why it would be worth the price you quote

in the end.

"Now the British at this time knew that the French were conducting

simultaneous negotiations with us. They did not like it, but there was absolutely

nothing they could do about it.

"And they confided to us privately that they were not happy with the

situation. Sometimes the members of the delegations would run into each other

while drinking late at night in one of the hotels. Mr. Adam Williams, British

GEC‑Marconi Group's representative to China once boasted how small the

world could be for him to know more people from across the English Channel

in China than he did in Britain.

"I had familiarized myself with the specific technological terminology of

the ASW system before negotiations began, and I believe I understood the

specific merits and quality of the British and the French systems. Westland was

the builder of the Lynx helicopter frame, but the avionics system, which is what

we were really looking for, the airborne torpedo system, the night imaging

system, sonar and sonar buoys, and this sort of thing, along with the MAD

system(Magnetic Abnormality Detection), was subcontracted.

"In the closing session of the seminar with the British they gave us their

price ‑‑ they asked for a little more than $100 million for one completely ASW

equipped Lynx. That was is called a non‑recurring price. If we purchased two

then the price went down. This was a lot of money to us.

"What we wanted to do was to buy the ASW technology and then

duplicate and reverse manufacture it. The foreign businessmen of course are

not that stupid and so they understand this. And so the technology always costs

a lot more than the hardware. Sometimes, they required, as part of a deal, to

buy more than one unit of a product in order to maximize further their profit.

"The French price was comparable to the British but with one important

difference. The French quoted their price in Swiss francs and the British gave

their price quotation in pounds Sterling. This was to be a clever move by the

French, in the end.

"After the two offers were made, our top experts and technicians from the

negotiating sessions met to discuss the two systems several times and they came

away absolutely convinced that the Lynx system was by far the best one for us

and that it was exactly what we were looking for.

"So at Poly we were all mentally prepared to buy the Lynx system from

British Aerospace. In fact, we indicated to the British specifically that `this

time you guys have a deal' and they were quite pleased with the news. It was,

to us, simply unthinkable at that time that we would buy the French system

rather than the British. But, it turned out, as it so often does in China, that the

unthinkable suddenly became the reality. The reason for this was simple ‑‑

bribery.

"Now the reason why the French were able to make a deal with us on the

ASW system and the British were not is because the French were more clever

and more venal than the British. The French were also very good businessmen.

The British were good businessmen, too. But the difference is that the British

were business gentlemen and the French were not.

"The British had a great system, but they were neither clever enough nor

dishonest enough to sell us that system. They were always forthright, honest

and well informed and totally above the table in their dealings. Because of

that, at Poly, we liked working with them. Basically, their attitude was, what

you see is what you get. But they just didn't know how to make a deal with

China. Their honesty was both their greatest strength and their greatest

weakness in China. This is too often true with the Americans also.

"The French, in their dealings with China, are seldom troubled by

honesty. They knew full well, of course, that their system was not as advanced

as the British. But they understood not only the ASW system, they understood

the Chinese governmental and business system, too. And at the same time they

approached us they privately approached our fleet admirals and they

approached our top‑ranking officers of the General Staff as well as of the Navy.

"They brought with them from France many very expensive gifts for

influential military leaders in China. These were delivered as negotiations

began. At that time the admiral in charge of this specific operation in the

Chinese Navy was the Chief of the Naval Fleet Air Arm, Li Jing, who is today a

Lt. Admiral. Since the helicopters purchased by Poly were to be used by the

Navy, so the Navy had a final say in the negotiations and the purchase. In a

sense, we at Poly were their agent in this deal.

"Admiral Li initially received from the French a small copper model of

the Dolphin helicopter for his desk. It was a beautiful piece of precision work.

There were many other gifts delivered to him also by the French, but I did not

see them unwrapped nor did I ever see them in the office. I only saw them

delivered and signed for.

"What was most important in this deal was that the Admiral received a

very special three‑page letter from the French. The first page of the letter

stated quite officially that "we are looking forward to successful dealings with

the Chinese Navy and we hope that all will work out well between us." Nothing

more than that, of course. And attached to that page was a second page. The

second page, was a bank draft ‑‑ a certificate of deposit, actually ‑‑ for

$US300,000 in a numbered Swiss bank account in Zurich. This was only one of

many such drafts I was to see while working for Poly. I remember the amount

of this draft because it was the largest personal draft I'd ever seen.

"The third page of this letter was an official notification of admission to a

French university for the Admiral's son. The notification also included a full

four‑year scholarship and asserted that following an evaluation of his academic

record and of his tests, the scholarship was awarded because of the admiral's

son's expertise in the French language. Now I knew the admiral's son and had

met him several times. He was in his final year of undergraduate college study

in Beijing and he spoke not a single word of French nor had he ever taken a

French language course.

"You see, the French knew exactly how the Chinese system worked. The

admiral had power to influence the decision on the ASW helicopters and so

Aerospatiale went after him. And what did the British offer him ‑‑ perhaps two

or three dinners.

"How did Aerospatiale know about Admiral Li's role in the decision

making process and about his son in his final year of middle school? They had

employed at a very good salary two consultants ‑‑ go‑betweens or facilitators ‑‑

in China, whose business in was to find out just such things ‑‑ who should be

treated with special care and special favor. This couple was constantly

researching military needs and family connections in China so that Aerospatiale

could more easily facilitate out its desired transactions.

"I knew this couple only as Mr. and Mrs. Wang. They wield considerable

invisible power in arms dealing transactions in China. They had been first

employed by Aerospatiale in 1982. They had both worked prior to that time in

the same unit ‑ the Signal Corps of the PLA. This had been an independent

organization that had been incorporated recently into the General Staff. Today

it is a department of the General Staff.

"Before he retired from the Signal Corps, Mr. Wang had been promoted

to the rank of regimental commander. He was, however, not happy with this

rank and he wanted to be promoted further. But the chance of that was not

good. So, he considered retiring from the Signal Corps, but was not permitted

to do so.

"The Signal Corps had in the past made some of our first deals with the

French and so Mr. Li had experience in dealing with Aerospatiale from the

Chinese side. He negotiated not only with the French but with the British also,

especially when it came to the purchase of communications equipment, his

specialty. He was, in fact, almost continuously involved in technical discussions

and evaluations. His understanding of communications and technology, it was

said, was one of the best in the PLA.

"In his negotiations, Aerospatiale was a regular party on the other side of

the table. They came to see Mr. Wang as the central figure in the decision

making process on the Chinese side. They found that not only was he well

situated in the military, but also that he was also from a well connected family.

Such a man, they guessed quite correctly, might be very valuable to them.

"And so, over the course of many months, the French recruited Mr. Wang

to work for them. We were not at all aware of this until all of a sudden Mr. Li

became very interested in learning more about the French. He and his wife

learned to speak French. Again they asked to be retired from the military, and

this time their request was granted. In 1983 they decided to work for the French

in Beijing. They were in an advantageous position. They knew exactly what

kinds of equipment the military was looking for and because of their family

connections, they had inside information concerning the military budget. This

was very valuable and critical information. Mr. Wang was willing to provide all

of this inside information to the French, for a price.

"The French offered them consulting positions. Mr. Wang and his wife

were invited to travel to France in order to examine the business and

manufacturing facilities of Aerospatiale and to gain first‑hand experience with

the company. They obtained their passports and visas and flew to Paris. They

remained in France for more than a year. During their stay, their son and

daughter joined them and were quickly admitted to French universities. The

children still today are there.

"Then, in 1985, just before China held a defense exhibition show, what we

call the Asiandex ‑‑ Mr. Wang and his wife moved back to Beijing. They moved

into an apartment, rather than a hotel, which they could easily afford, in order

to emphasize that they were still Chinese citizens. They maintained a

permanent office, however, at the Beijing Hotel. But everyone knew that they

were now very heavily committed now to the French and promoting deals for

the French.

"I'd heard about their new role in 1985, just before I met them for the

first time in 1986. By that time, everyone at Poly Technologies knew Mr. and

Mrs. Wang. And whenever a new employee came into the company, he or she

was immediately introduced to the Wangs. Everyone had to know him.

"During the 1987 Defense Exposition held in the China International

Exhibition Center, Mr. and Mrs. Wang were always busy touring the French

exhibition stands. He also introduced the Chinese and the French vips to each

other and discussed the merits of some of the systems on display. And

whenever the generals from the air force or the admirals from the Navy came,

the Wangs were by their side constantly.

"On a couple of occasions when I accompanied Admiral Li and other

high‑ranking military officers, he enthusiastically escorted us around the

exhibition center. He was always eager to entertain us and was always asking,

`Oh, and where is the admiral going later?'

"The first evening we met him at the exhibition, he kept glancing

anxiously at his watch and asking about our plans. And the personal assistant

to the admiral finally confessed, `Well, we have no where to go and we don't

know where they will eat.' So Mr. Wang invited us out for dinner and took us

to the Great Wall Hotel, which is near the Exhibition Center. There we had a

very nice ‑‑ and expensive ‑‑ dinner. And it seemed in the days following this

first meeting, Mr. Wang was regularly inviting us out for lunch and dinner ‑‑

and it was always very expensive and it was always his treat.

"After dinner, Mr. Wang smoked some very nice Chinese cigarettes, his

favorite brand was Red Pagoda Mountain, Hong Tashan. I think he did it just

for show purposes. He just sat side by side with the admirals and with the

generals when they were present, and by his smoking he seemed to advertise,

`You see, I'm still patriotic. I refuse to smoke foreign imported cigarettes, even

though I can afford them. These are the ones I prefer, despite the fact that I

stay in France and I work for the French.' If he had a lot of money, and I

believe that he did, then he made a point of never showing it off. The

cigarettes were a case in point. Whenever he smoked, he smoked maybe half an

inch from the cigarette, just the end, and then put it out. He was a chain

smoker, but only smoked the tip of the of the cigarettes. And he always picked

up the tab.

Whenever we dined with Mr. Wang, he spent most of the time we were

together discussing family matters ‑‑ children, wives, relatives and so on. His

wife listened intently and usually added little to the conversation. She was a

much better listener than talker, and I am sure she tried always to pick up on

private family matters and later made a note of them for future reference. Mr.

Wang, also, learned a great deal, always, about family members of the military

officers and their private wishes and desires. At the end of a meal there was

always a series of toasts to the family.

"And finally, just before dinner ended, or at least near the end, then Mr.

Wang would suddenly bring up business. And he would say, in a smooth tone of

voice, something like, `All right, this time the French have this or that for you,'

and then his semi‑formal presentations were quite detailed and very convincing.

Sometimes it was strange to listen to. He would talk about his children and

then in the same breath bring up the fact that the French had superb, the

thermal imaging system, and so on. And he said, `I just spoke with them and

they will reduce the price for you, they are making a point of it. This is an

excellent deal. You should not pass it up.' The admirals and the generals of

course were not well educated and not really well informed in these matters ‑‑

they depended for their information on others, and often, they depended on Mr.

Wang. Once they heard his pitch, they were inevitably interested.

"They usually responded enthusiastically, asking many questions about the

details of the proposed deal and the details of the system itself. They also

confided in Mr. Wang and treated him as though he were acting as an agent of

the Chinese military ‑‑ which he was not.

"'Make sure,' they would tell him. `Don't let them charge us an

unfavorable price. You are the guy who knows the bottom line. So don't

deceive us. Get us a good deal.' And Mr. Wang then did.

"Mr. Wang or his wife would always respond, `Oh, you can count on us.

We are all from one big family. Of course we trust each other.' And then,

smiling and walking away from the dining room while poking a toothpick around

in his mouth, the Admiral signaled to his personal secretary to make a report

about the deal and to bring it to his office in the morning.

"But of course I knew exactly what they were doing. Every time Mr.

Wang opened his mouth he was drumming up business for the French, reciting

the French line. My God, if he wasn't unusually valuable to the French, they

would never pay him the way they did.

"Mr. Wang was well positioned to do business. He knew where the weak

points of the French were and where the weak points of the Chinese were. That

was the key to his success. He knew what the military had to spend, what the

French could or could not charge, and who had children that might like to

attend a French university.

"When he spoke with me he was outgoing and flattering. I talked to him

often about business. I was quite surprised. He seemed to know Poly

Technologies inside out and he knew personal things about all of the top guys

in the company.

"I once asked one of Admiral Li's staff officers about Mr. Wang and he

said, `Mr. Wang is very helpful. He travels back and forth to France all the

time. Then whenever there is business to be done, he is here. He has French

citizenship and he is a permanent resident of France and his children are

there.'

"Now, in the competition between the Lynx and the Dolphin, the French

positioned themselves perfectly when they quoted their price in Swiss francs.

They were told that the price quotations were similar. But they let it be known,

through Mr. Wang, that they would give a `very favorable' exchange rate on the

Swiss francs so that in fact their price would be much lower than that quoted by

the British. Mr. Wang conveyed that news to us. Still, however, the British

system, we felt, was far superior to the French and was well worth the price

differential.

"After making their presentations and giving their prices, the French and

the British ‑‑waited around Beijing waiting for a decision to be made. A group

of Chinese dignitaries and military personnel from the general staff, including

the equipment department, made a special trip to visit the facilities of

Aerospatiale in France. I did not accompany them on that trip.

"The head of the delegation flew, as usual, first class on a Air France jet.

Although most of those who went were high‑ranking military officers, none of

them wore uniforms. No one was to know that they were in the military, but the

French knew. They stayed, naturally, in luxurious hotels in Paris, and each

night they were escorted around the city to the cabarets and the night spots.

Some of them flew down to the southern cities at that time ‑‑ to Toulon and

Marseilles to see the French defense research facilities. They were supposed to

make a survey of the manufacturing facilitates that would produce the Dolphin

system. But this was just a symbolic trip, since everybody knew already that the

deal was made. The officers from the department were convinced by

individuals from the top, or bribed in one way or another, and once the top was

in the bag, so to speak, then the deal was done. The trip to France was merely

a junket on Aerospatiale. A nice bonus for the Chinese. These people came

back and said later that they favored the Dolphin system and that they based

their decision on their survey of the manufacturing firms. This is simply not

true. They merely pretended that they were even more convinced than ever that

the French had an advanced ASW system and this was exactly the thing that

they were looking for.

"And so one month after the three‑page letter was delivered to Admiral

Li the decision was made concerning our next major purchase. Remember, in a

country like China, one month is prompt. Those of us from Poly involved in the

negotiations recommended purchase of the British Lynx system, but we were

overruled. The French got the deal. We got the Dolphins.

"The British of questioned us later about this, about not getting the deal.

Of course they were very deeply concerned. And they cautioned us and said

that the French didn't even use their Dolphin helicopters on board their own

ships. China ended up as one of the very few countries in the world that

actually used Dolphin helicopters for shipborne helicopter defenses.

"The Rear Admiral in charge of the project was concerned and upset

after this as to what had happened. He sent a letter to the Admiral and he

approached the officers on the General Staff. But it was to no avail, of course.

"As to the $300,000, Admiral Li would be unable to use this himself, but

it was arranged so that his son and daughter in France might enjoy it.

"The British expressed their dismay and disillusionment with us on

several different occasions. I think they knew where Poly stood on these

decisions. And they told me once, at a diplomatic gathering, `OK, what kind of

a corrupt system do you guys have here? You just keep purchasing this god‑

damned garbage from the French. Don't you know that these systems will never

work in a real war situation?'

"In fact, the answer to the question was a simple, yes, we did know that

these systems would probably never work in "a real war situation." But the

point is, that the system we purchased was probably never meant for a real war

situation. Rather, it was intended as a business transaction with specific

beneficiaries. And in that respect, it was very successful.

"The National Security Ministry, in time, caught on to the bribery system

that was practiced in military procurement, and sought to stop it. The

individual they selected to interrupt the corrupt system was, unfortunately, a

woman named Wang Jian Jiang. A top agent for the National Security Ministry,

she was sent to the Navy at the end of 1987 to supervise the political and

disciplinary matters concerning foreign affairs and procurement. Because of

her special status with the National Security Ministry she had to spend a lot of

time in the central command compound of the Navy. She, allegedly, should

have cured the problems of foreign arms corporations, including the French,

from taking advantage of the familial concerns of the officers that made them

so susceptible to bribery. But things went awry soon after she arrived and

rather than cleaning up the system, she became a central part of it.

"Within a very short time, Wang Jiang Jian had not only made contact

with several of the top admirals in the PLA navy, she had in fact forged

intimate contacts with them. Secret liaisons with the officers were made easy

for her because she lived in a private suite in the Purple Jade (Ziyu)Hotel in

the western suburbs of Beijing not far from the headquarters of the Navy. This

provided her with privacy, convenience and freedom to do what she wished in

the hotel.

"Miss Wang, an unusually and naturally well‑endowed woman who was

described by young naval officers as `attractive in two ways,' had recently

divorced her husband, who was a section chief a in the National Security

Ministry. She maintained custody of the couple's only child, a daughter. Miss

Wang and her husband had divorced, it was said, because of her many extra‑

marital affairs. She continued her romantic aggressiveness when she began

supervising Naval affairs. To officers both old and young at the Naval

compound, she was always warm, friendly and radiating. And soon after she

arrived at the Naval compound she fell in love with many of the officers.

Among her many lovers in the Navy was the Captain Xie Tie Niu(Iron Ox).

In time, her affairs with Naval officers caused difficulty. She began to

pressure Captain Xie to divorce his wife in order to marry her. This was a

problem since Captain Xie he was not that serious about Miss Wang. But she

could cause him trouble by widely publicizing his extra‑marital dalliances. So

he made a deal, authorized by the admirals at the compound.

"Directly under Captain Xie was a naval commander named Zhang Lu‑

ting. He was a prominent individual in the Navy and an heir apparent to the

section chief's position. The commander was handsome, had a good Naval

background, and most important, was single. So Captain Xie made a deal with

him, telling him `If you want to succeed me as section chief, you must marry this

woman!' Of course, he did not like Miss Wang, but, he had few choices at the

time and there was a lot of pressure on him. If he wanted a promotion he

would have to marry her. Miss Wang, on the other hand, was very happy with

the prospect of this handsome and relatively naive young officer as her husband.

This was the sort of prey she was looking for, and she approved of the

arrangement.

"The problem was now with the young officers. When he told his mother

about the arrangement, (his father, a prominent figure in the Navy, had passed

away earlier), she was outraged. She personally knew of Miss Wang's practices

and reputation. So Commander Zhang's mother personally came to the naval

compound to question the admirals. `What in the hell are you trying to do to

my son?' she shouted at one of them in the hallway. Her protests were

overheard by many officers working nearby. She returned to the compound

many times and always stayed for several hours and demanded to see the

Admirals. She would not leave when asked to. She pressured whomever she

could find. But Captain Xie would not bend in his decision and he said to his

fellow officers, `The deal has been made.' But he told others, including

Commander Zhang's mother that this was not a deal and that Zhang and Wang

were really in love.

"So the young officer was the only one to suffer from all of this. He was

disowned by his family. But he did marry Miss Wang and all of the important

admirals who had been lover of Miss Wang attended the ceremony.

"Of course, later on, Commander Zhang got his promotion to captain and

succeeded Captain Xie. And Miss Wang, now Mrs. Zhang, of course,

maintained her hotel room and continued her former ways. She and her

husband lived in a suite in the Purple Jade hotel. But for National Security

Ministry purposes she also maintained four other specially designated rooms.

Now, however, in addition to romantic affairs with high‑ranking naval officers,

she also began having affairs with foreign clients in Beijing to do business with

Poly Technologies and the Navy. French and English businessmen in Beijing

sometimes stayed at the Purple Jade Hotel for a few nights in order to be near

the Naval compound. And in the course of their business, if they were at all

attractive, they were sure to be introduced to Mrs. Zhang. It became known

that any foreigner hoping to make a deal with the PLA Navy through Poly

Technologies, had better satisfy Mrs. Zhang If she was not satisfied, there

might be difficulties in negotiations later.

"This created some anxiety, however, because Mrs. Zhang was rumored to

be nearly sexually insatiable. She was never really happy with her young

husband. She purchased strong potency medicines for her him and delivered

them to the office. When he came to work each morning, he looked weary and

haggard. The other young officers chided him half seriously. `No sleep last

night, Captain Zhang?' they asked. `What's the problem? Anything I can do to

help?'

"Captain Zhang is today is head of the Office is the International

Procurement of the PLA Navy. And Mrs. Zhang, as the wife of the officer in

charge of procurement, has even more legitimate reasons than before for

getting involved intimately in naval foreign affairs. Whenever there is a

seminar or a banquet at which foreigners are involved, she is always around,

looking over the participants. But she not only supervises the political and

diplomatic line of the business process, but is also committed to logistical

matters of foreign‑related activity.

"Now whenever there is a banquet or reception, when the festivities are

finished, Captain Zhang and his wife invariably stay behind to help settle out

the bills. And because of their responsibility to take charge of financial

matters, they have been able to include into the reception bills items such as

American cigarettes, expensive French wine and champagne, and western

cosmetics. As an example, there is a medicine for cosmetic purposes that is

made from pearls. It is extremely expensive in China. Yet, on a couple of

occasions, the purchase of these pearl cosmetics was simply included as a

functional expense of the reception activities and Captain Zhang and his wife

were compensated for these items by the Navy.

"On several occasions, other young naval officers watched, when a

banquet was finished, as Captain and Mrs. Zhang left the restaurant through

the back door, and headed to their own car with several large bags. Once at a

reception at the Renewed Restaurant, which once served the Imperial family at

Summer Palace, this occurred and a young officer curiously followed the

Zhangs from the restaurant. He made a point of stopping them but as he was

about to inquire as to what they were carrying in their bags, the Mrs. Zhang

seemed to woman read his mind and in order to shut him up, opened a bag, and

offered him two bottles of expensive Maotai Liquor ‑‑ the very best in China‑‑

and five cartons of Kent cigarettes. She said impatiently, `Here, take it! This is

something our friends brought us from Hong Kong!' She forgot that any Maotai

liquor on sale in Hong Kong had a different trade mark from that sold in

China.

"As time passed, Mrs. Zhang's reputation among officers in the naval

compound grew worse and worse. Finally, the disciplinary committee of the

Navy intervened. Although it was a very difficult process because of her

connections with some of the top admirals of the Navy, as well as the foreign

affairs group, still the Navy managed to contact the National Security Ministry

and very gracefully had Mrs. Zhang assigned back at that ministry.

"Within the Navy there is a department called the Equipment

Department. And under this department is a very powerful Political Division.

In 1987, 1988 and 1989 the director of that division was Captain Wang Dan‑ya,

who came from a very influential communist party family. He was promoted to

the position at the age of 47, which was relatively young, for someone having a

similar post in the Navy at that time. He and Captain Xie Tie‑niu, as well as

the Rear Admiral Zheng Min, who was in charge of the entire department, were

all interlocked in their personal relationships and their family background

connections from outside the Navy. These three men were among the very few

officers in the Navy who shared a common and influential civilian background.

Because these three people held very important jobs concerning Naval foreign

affairs. So, whenever there was an important decision to be made concerning

Naval procurement policy, these three and Miss Zhang met together before any

decision was made, officially. That is why they were referred to within the Navy

ranks as `The Gang of Four'(Si Ren Bang). But unfortunately their honeymoon

did not last very long.

"Mr. Wang had a relative in Taiwan. And as China opened its doors to

outsiders more and more Taiwanese poured into the mainland, Mr. Wang's

nephew, who was in his early thirties, came to Beijing for a visit in the spring of

1989. Against all the rules and regulations of the military, he stayed in his

uncle's family home. Then, almost as if it was a prearranged to look like an

accident, the captain made a point of leaving some important Party and Navy

documents on his desk at home when his nephew was there. The whole point of

this seemed to be that he knew that the young man worked for Taiwanese

military intelligence. But he didn't tell anyone else. And the purpose of

making classified documents available to the young man was to try to generate

some personal profits for himself. Therefore, these important documents were

duly photographed and were taken by the young man, who almost made it out of

the country with them before he was detained by agents from the National

Security Ministry agents. The Ministry immediately recognized the nature of

the documents, which concerned the Navy Strategy and Procurement and arms

sales policies towards neighboring countries, the Soviet Union and the United

States. These were long term strategy plans. So the National Security Ministry

informed the Navy and asked the Navy to check the serial numbers of the

documents, which were printed at the top of each document, to see who had

handled them. And of course the first name that came up was Admiral Zhang

himself. He was so angered by this, that he immediately summoned his two

friends to his office and closed the door. He showed both Captain Wang and

Captain Xie the information passed down to him by Naval superiors and a

disciplinary committee of the Navy. And he shouted, `This time you guys made

a terrible mistake!' Hearing this, Captain Wang became frightened and

explained 'Oh, I didn't know he didn't know my nephew had Taiwan military

connections! The only thing I knew was that he was my nephew. That was all.'

Knowing it was a lie, the Admiral just quieted him down. He responded, `OK,

that's enough. What has happened has happened. And this time because of the

nature of this incident, you guys are in big trouble. And no one else can help

you.'

"All three of these officers, at the time, were involved with Miss Wang

from the National Security Ministry. And she had unlimited access to their

offices. When she wished to see the Admiral, she need make no

prearrangement and was always waved on in by his secretary. At this moment,

she burst into their meeting. She confronted her three lovers and learned how

much trouble they were in. `You guys are in trouble, I cannot help you this

time,' she told them. Together, the four concluded that `in order to keep the

boat continuously sailing, which can be profitable to all of us, Captain Wang

and Captain Xie would serve as scapegoats, and resign from the service.' They

would exonerate in their resignations, Admiral Zhang. So, the next day,

Captain Wang handed in his letter of resignation together with a self criticism

letter, admitting that the crimes he was charged with had taken place. On the

same day, in the afternoon, Captain Xie also handed in his resignation letter

only a month after he celebrated with Poly Technologies officials the signing of

the French Dolphin contract. Normally, for any naval officer above the rank of

Captain, if he wanted to resign from the Naval service, it would take at least

two months to get the approval of the superior officers, if it was approved at

all. But this time because of their contributions to the Naval Modernization

Drive, in which they themselves profited very heavily, their permission was

granted in only two days. But because of their important civilian background

connections in the business field of China, these two individuals left the Navy

and one week later headed for Shenzhen for the Special Economic Zone there.

The second day after their arrival in Shenzhen, Mr. Wang and Mr. Xie were all

given new jobs. While Mr. Xie served as the vice president of a very influential

and important import‑export trading corporation in Shenzhen, Mr. Wang served

as senior consultant in the same company. And within a short time they were

also given luxurious apartments in Zhuhai, which was another special economic

zone facing Macau across the sea.

"This was the first time in the history of the PLA that senior officers,

especially the officer heavily indoctrinated in the political warfare system,

charged with serious transgressions, resigned and then so smoothly and quickly

moved into profitable and influential positions at the forefront of trade in

China.

"Their resignations from the Navy created both a deep shock and a

profound impression upon the rank and file of fellow officers in the service.

The signal seemed to be clear. `To serve the people is always your business,'

one officer explained his conclusions from the incident. `While to serve self

interests and promote them under the disguise of serving public functions was

the real alternate goal.'

"The decisions that these four individuals made no doubt very often

favored the French! After that it was more difficult for the French to get their

weapons systems selected by the PLA and Poly Technologies. Within a few

weeks, Mrs. Zhang was `handed back' to the National Security Ministry, no

worse for the wear.

"And a short time after that, young Captain Zhang and his wife were

given a very nice apartment on the seventh floor of a Naval apartment building

located west of the Naval Compound Headquarters. And he spent 20,000

renminbi only for interior decorations of the apartment. They brought out of

storage some of the loot they had acquired from foreign transactions. They

had several large screen colored television sets and vcrs, a hand‑carved snack

bar, imported negative‑ion generators, French made hunting‑rifles and British

pistols, and a silver‑plated German machine gun. The guns were displayed in a

glass‑doored cabinet. Imported French wine and champagne was displayed on a

on a large wine rack. When asked where they acquired these items, they say that

they brought them back from France, never mentioning that some of these

items were also bought in China with public funds.