Boeing engineer passed secrets to China
• 20 years' jail likely for economic espionage
• Trial shows increasing protection for US interests
guardian.co.uk, Friday 17 July 2009 19.40 BST
A former Boeing engineer accused of passing trade secrets to the Chinese government for more than 30 years has been found guilty in the first big economic espionage trial in America.
The conviction of Dongfan "Greg" Chung marks a stepping up of US attempts to protect commercial and national security interests against overseas spies. After a 10-day trial in Santa Ana, California, the judge, acting without a jury, found Chung guilty of six counts of economic espionage, as well as acting as a foreign agent and making false statements to the FBI.
Prosecutors presented evidence of contact between Chung and the Chinese aviation industry dating back to 1979, six years after he joined Rockwell International, an aerospace company taken over by Boeing in 1996. He was arrested in 2006 after federal agents searched his home and found more than 300,000 pages of documents relating to development of the space shuttle, the fuelling system for the Delta IV rocket, and several jewels in Boeing's crown including the F-15 fighter, B-52 bomber and Chinook helicopter.
One letter found at his house dating from 1987 from a Chinese official said: "It is your honour and China's fortune that you are able to realise your wish of dedicating yourselves to the services of your country."
The judge, Cormac Carney, wrote in a 31-page verdict that "the trust Boeing placed in Mr Chung to safeguard its proprietary and trade secret information obviously meant very little to Mr Chung. He cast it aside to serve the PRC [People's Republic of China], which he proudly proclaimed to be his 'motherland'."
The conviction highlights the peculiar nature of the US-Chinese relationship. On one hand, the US is increasingly dependent on Chinese loans to prop up a deficit which last week rose above $1 trillion (£612bn). On the other, US companies are increasingly concerned about Chinese commercial spying. As the world's engine room of research and development, the US is vulnerable to espionage, especially in the technology-rich aerospace and military industries, telecommunications, cars and pharmaceuticals.
The Economic Espionage Act, passed in 1996, made spying on private companies a federal crime punishable by lengthy prison sentences and fines of up to $10m. At the time, Louis Freeh, then director of the FBI, warned that "economic espionage is the greatest threat to our national security since the cold war".
The 9/11 attacks changed the landscape of national security, pushing economic spying to the sidelines. But for US companies it remains a very real drain.
Steven Fink, president of the corporate crisis management company Lexicon Communications and author of Sticky Fingers: Managing the Global Risk of Economic Espionage, said that all countries engage in such spying, but the Asian region was predominant, with China the main perpetrator. There had been prosecutions under the 1996 law, but the American legal system was "woefully inadequate faced with the theft of trade secrets from American businesses".
The Chinese government says it is also a victim of economic spies. As global economic strife puts businesses and governments under pressure, tit for tat accusations are starting to mount. In the latest case, Beijing has accused the Anglo-Australian mining company Rio Tinto of bribery and arrested one Australian and three Chinese employees.
Chung faces more than 90 years in prison when he is sentenced on 9 November, although the US government is expected to recommend the minimum sentence of up to 20 years.
Chung, 73, was born in China and moved to Taiwan and then the US in 1962. He became a naturalised US citizen and spent 40 years working for Boeing and related companies.His high-level security clearance lasted from 1973 to 2002.
The FBI became interested in him in 2006 after the arrest of Chi Mak, an engineer in L-3 Communications, a hi-tech surveillance equipment firm. Last year, Mak, who Chung had been using as a conduit to Chinese officials, was jailed for 24 years for passing on military secrets.