Wednesday, December 19, 2012

The Plot to Buy the Shangri-la

PLA Intelligence Official speaking:

Now there are agents -- our "friends" -- in organizations in the US. And when we need information we get it. Let me give you an example. On American aircraft carriers. Let me put it broadly first. We get whatever information we need. Whatever information. It would shock you. It would shock you!

The Shangri La I think is our greatest failure. Actually. A major disappointment. It was supposed to be for scrapping purposes. At that time, in 1986 and early 1987. We wanted to design our own aircraft carrier. We wanted to learn some of the landing and maintenance techniques that the Us had. This was a medium sized aircraft carrier from World War II, and this as a medium sized carrier and that is what we wanted. The technology was modern on the carrier. At that time the situation in the South China sea was so critical. We had naval skirmishes with Taiwan and with Malaysia over the Spratley Islands sovereignty. At that time, China became to think, or was reminded of the seriousness of having long range protection force capability, an aircraft carrier was the ideal solution for the Chinese navy, since a lot of areas in the Spratley islands were simply out of the range of the shore based fighter bombers. And so China needed an aircraft carrier. Therefore, they wanted to buy one. Actually, in 1980, China purchased one carrier, the old World War II model, from Australia, the Melbourne, the city in the southern part of Australia, We bought that and disassembled it. Every part was taken off with extreme care, it was disassembled in a shipyard near Guangzhou. And it was studied and the contract originally was for scrapping purposes. But every part was evaluated. Then we found that it was not enough. We needed to buy one from the US and evaluate it. The US was more advanced. That one was from Britain, but we needed one from the US. Of course we could never buy something like the Kennedy or your modern carriers, but we needed to buy a medium sized not to old ship. For scrapping purposes. So there was an argument in China. Some wanted to keep the Shangri La and to use it as it was. But the Shangri La they had something else in mind. It was put up by sale in Philadelphia. So we immediately jumped into the bidding for the ship. And we almost got it.
They obtained assistance from Am friends who are extremely well connected here in Am. They had access to information having to do with the bidding from Taiwan. So they went through a lot of activity, and they carried on covert surveillance and observations, and they concluded that they knew what Taiwan would offer. So China didn't want to spend too much, so having information on the bidding was crucial. This was a scrapping company making the bid, a company in the North, situated on the Northern coast of China, this is still secret today. This was not an open bid, people had to know who the bidder was. The bidder was only from Taiwan, as far as I know. The bidder was a ship scrapping company on the North Coast. We know who it was. The only competitor was from Taiwan, they were willing to offer more money, and we knew exactly how much. The bidding procedures were extremely confidential. I know that China offered a slightly higher price. So theoretically, we should have had the deal. But, unfortunately, your CIA found out that we wanted to use this carrier for something. Due to influence from the government, without opening the bid from China, the ship was sold to Taiwan. Chinese personnel from the security ministry went on board and videotaped the ship. They identified themselves as from the salvage company and Poly Technologies people identified themselves as salvagers. Then a small handful of friends from the circle also came with us on the ship. Genuine blue-eyed, blonde haired Americans took us aboard the ship and helped us greatly. Not Chinese Americans
They were satisfied on the Shangri La and found that the catapult was still intact and the large caliber cylinder was still intact, that drove the catapult, and this is what we wanted. Poly wanted that ship. We would get it from the salvage company and individuals involved in the intelligence services were involved in the deal also.
Now, they were so sure that they would get the ship, and they were extremely experienced people, and when they believe they will get something they will get it. But this time the US government intervened. So money was no longer the issue, but politics was. So they lost the deal.
And the State security people then had their friends buy cars in Philadelphia and Seattle. They knew it was going to China, and they wanted direct access to clearance in customs in China. Everyone would make a profit. Cars would be a solution to the problem. So they bought hundreds of cars in the US, new cars, ordered them. On both coasts. Not in concentrated areas. These were National Security people and their friends.
They had to resell the cars. They lost money. Some had agreements with car dealers, and returned them to friends at car dealers. But they had to eat the discount. That company generated a profit, but China lost money. The car dealers didn't have to be friends of China. The dealers arranged everything. They ordered the cars and told where to have them delivered for export, that was all legal. That was all legal, so long as you have the clearance documents, customs, tariffs and so on. Who cares that this was going on. But once the deal was lost the had to resell the cars. The government agency would have owned the cars in China, and then resell them. That is extremely profitable. The government, of course, was not informed of the deal. The security ministry was informed of the deal, but it was a profitable venture and who cares, as long as you generate a huge profit. The security ministry was not going to buy this car, others, in the provincial governments, or in the agricultural ministry and so on. The Chinese would pay eventually, and then they could be sold to a third country, in the middle east or so on, in a third country and generate a profit there. Everyone was after a profit, of course. It could have been a collective profit, of course. A little bit of profit, of course, would have meant an awful lot of money.
Let me tell you something about your security. I saw books from your warships, time and again, which we translated into Chinese for our own use. The manuals for aircraft carriers and from submarines. That was for our business.
The Public Security System is for the people, but not for Poly. We are above that. I remember on a couple of occasions when I was involved in business, and there was this intersection with foreigners , and I was followed by public security agents. They didn't seem to know who I was. So Poly called them off. They came up on the elevator with me, saw the floor I went to, and they then asked who I was and I never saw them again. I had to go to the American Embassy, for example, and they wanted to follow me.
The people who purchased the cars in Seattle, they were State Security Ministry people. That is equivalent to your CIA. These individuals of course are stationed everywhere. Besides, they have a lot of loyal support, from influential people in America. Now those people, some of them, I know personally. In China I met them first. They have both houses in the US and then also in Beijing. In China they live in luxurious compound, funded by the government. These are all American born Chinese. But these Chinese are well connected with Americans in your country, to be sure. And some of them themselves are well connected and well to do in your country. Of course they do not do what they do for money. They do it out of what they believe is patriotism -- to China. It is a funny world, I tell you. If you include that in your story, few people in America will believe this, I know. And it is a hell of a story. How can you make people in America believe this. When I first met them, I looked into their eyes, and I knew what they were about. I knew what was driving them, why they were taking the risks they were taking.
If we were -- well, the Shangri La would be the best example of how they work. This was in 1987 and in 1988. Well, in China, I saw a videotape of the ship with our people on board examining the ship, accompanied by blonde-haired, blue-eyed Americans. I saw that video, shown around by people from your government. It was sale for scrap. The video, we did that ourselves. And when the delegation returned hone they showed the videos to our leaders and they showed it to us.
The people who were examining the ship, of course, represented a scrap company, in China. They were really representing us, and a company from Hong Kong was also involved in that they would tow the ship first to Seattle and then to China. When I looked into these people's eyes, based upon my knowledge of this deal itself, I knew, of coursed based upon my knowledge, these people were not in it for the money, I knew. They did it purely from political conviction. They think your country is rotten. They see it for what it is. Now these people are not communists, they are not members of the Communist Party in our country. The party members think of them, well, the words they use are, "they are extremely helpful." There is little reluctance to trust them. There is an extremely powerful organization within the PLA, whose job is solely to take care of these individuals. I know what that organization is. There goal is to make use, as much as they can, of the social position of our friends in other countries, including America. And Singapore and everywhere. They have different offices around the world. One office overlooks both the US and Canada and is called Meida, Canada and America. That office. This one over Hong Kong, that one over Taiwan and that one over Singapore. These people, when they go to the office may go in uniform, if they so wish. But if they do not wish, or when they travel, they immediately get a visa from a foreign embassy. The name of the organization, I will tell you, depends on how far we go. Very few individuals know about this organization.

[Note: Roy Rowan and I worked on this incident and others for a major story for Life Magazine in the early 1990s. Roy was a regular staffer for Time-Life and a legendary Asia Hand. Our source, meanwhile, kept laughing at us, telling us that the story would never run in a major American magazine -- never! We were so naive he said not to believe how influential and powerful the PLA and Poly Technologies were in America. About four days before our story was to run and while it was going through a "fact checker" we suddenly received a phone call from Life editor David *****. He was disturbed because he had just met with Life's fact checker and had been assured by the fact checker, who was Chinese, that there had never been "an aircraft carrier named the Shangri-la." Roy and I were astounded. In those pre-internet days I hurried to the university library and xeroxed several photographs of the Shangri-la in order to save the story. But it was all to no end. David was spooked by the revelation that we may have been misled. I asked to speak to the fact checker and had him call me -- and I taped the call and still have the cassette. He insisted that he had done a thorough search and there was never an aircraft carrier named the Shangri la. I telephoned the Philadelphia Navy Yard and asked about records for the ship and was told by an individual there that all of their records for the Shangri la had long ago been destroyed. There is, however, a Shangri-la photo museum on board the USS Hornet anchored in Alameda, CA. The Shangri-la was an Essex-class carrier, CV-38. When I asked the clerk at the Navy Yard why the records had all been destroyed he asked me, "If you sold your Volkswagen ten years ago, would you still have the records for it?" I responded, "but you're talking about a Volkswagen, I'm talking about an aircraft carrier." His angry response, "Same difference!" Duh.]

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