The Tiananmen Square Massacre Deal

THE TIANANMEN SQUARE MASSACRE DEAL

by
PLA Captain ****** ****
as told to
Larry Engelmann
May 18, 1999


A delegation representing Aeropspatiale, the French arms manufacturing and trading company, arrived in Beijing in on a very warm and humid morningin 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 crise\is 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 times, I know, when
they behaved exactly the same way.


"The French have been the principle 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

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.