Talking Notes from Tapes

3

French Scholarship

"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 ship borne ASW helicopter. At that time, we had no ship borne 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, the 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 correclty, 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 -- dinners. 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 half 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 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 in some cases, 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 resided 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 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 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 an intimate 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 unuusally 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 aggressivness 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 promoted 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 exonorate 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 would be 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.