China trying to politically infiltrate NZ and Australia – report

A leaked intelligence briefing for Australian law enforcement agencies suggests China may have already deeply penetrated Australian and New Zealand political and business circles for espionage purposes.

The document, reprinted in the new Investigate magazine out this week, says the pattern of Chinese “investment” in Australia and New Zealand is following exactly the same lines as it did in Canada, where intelligence agencies discovered Chinese government agents posing as rich investment migrants had bribed and corrupted Canadian politicians and officials.

“Few of you will have heard about the “Sidewinder Report”,” states the briefing paper published in Investigate.

“Allowing it was tabled over a decade ago, after which money, influence and corruption were all brought to bear to have copies shredded, that isn’t surprising. Fortunately a single digital copy survived, so we can still analyze/learn from this in-depth and rather alarming study, which is a very good example of Asian/Triad/Organized crime/long term planning.

“I personally believe a similar scenario exists/is being established in the likes of NZ and Australia, where similar immigration policies are in force. For this reason, I want to give you a detailed breakdown of the report, and you can perhaps reach your own conclusions.

“The report was commissioned in the mid 1990’s codenamed “Sidewinder” and was a joint effort prepared by Canada’s Secret Intelligence Service and the National Security Division of the Royal Canadian Mounted Police. Its mandate was to look at Chinese Triad involvement and integration into Canadian Financial and Governmental sectors.

“The report clearly found that over a period of time many Chinese triads,  (Sun Yee On ) agents of the Chinese Secret Intelligence Service (CSIS), and Hong Kong tycoons, had firmly established themselves in Canada and had acquired Canadian nationality.”

The document states that Western governments have relied on official Chinese agencies to “vet” prospective immigrants to Canada, the US, Australia, UK and New Zealand, because local law enforcement has no way of independently verifying the identity or history of migrants.

That’s allowed China to slip its own agents into Western nations under the guise of immigration vetting.

“Canadian and Chinese consular staff were selling visas to members of the Chinese mafia and China’s intelligence service, prices were as high as $100,000 per visa,” says the leaked report.

In return for being approved to live and do business in the West, the migrants were given orders on how they could repay the favour to Chinese intelligence.

“They were instructed to make donations and get involved with political parties. Children studied hard and were directed at Government positions, many becoming well established in the ranks of the Immigration dept.  [Name withheld] was Minister of [Portfolio withheld] during the 90’s. He forged close links which China. “Somehow” he and his cronies are now all millionaires.

“By the year 2000, Chinese people affiliated to Triads owned one-third of downtown Vancouver. China invested over one billion dollars in 2001 to buy Canadian businesses in strategic areas and is also a large stockholder in Canada’s Imperial Bank.  It controls 15 corporations in the country’s technology sector.   By 2002, over 200 Canadian Companies were under the direct control of China’s International Trust & Investment Corporation (CITIC).                                                                           

“CITIC (Pacific) has many links to major Australian and NZ businesses. The Pengxin Group currently bidding to buy Crafar farms in New Zealand are linked to CITIC. CITIC operates directly under the general staff of the People’s Liberation Army (PLA). It is also the world’s largest private operator of container terminals, having lucrative stakes in 17 ports in Europe alone.”

The full report is in the latest Investigate magazine, but its publication coincides with reports this week that Australian intelligence has vetoed the involvement of communications giant Huawei in Australia’s broadband network, for fears it will help China spy on Australia.

Huawei has already been given approval to take part in New Zealand’s broadband rollout.

The chairman of Huawei was formerly a senior official in the Chinese state intelligence agency, and its founder was formerly a solder in the People’s Liberation Army.

Huawei denies any involvement in espionage, but this week its links with US corporates were also cut over similar fears.


  1. “I am sure that NZ intelligence, civil service and politicians are well aware of how China plays the game, and how to respond to it and possible equal and or even outplay them at it.”

    Sadly, NZ – particularly at MFAT level – has proven clumsy in the past and utterly unaware of embarrassments that Investigate magazine had to bring to their attention, (see ).

    I won’t bother reprinting the Yang Liu scandal that Investigate broke, or the fact that we were first to confirm the criminality behind the original Crafar Farms deal consortium out of China.

    The latest Investigate contains some diplomatic cables revealing NZ is aware of China’s punch, but doesn’t actually know how to deal with it.

    You are right, of course, when you say “Internationals relations is very akin to marriage you have to trust each other as the relationship matures and deepens but at the same time not be willfully blind to actions of the other which are contrary to that relationship and which endanger it.” BUT, it’s the responsibility of the Fourth Estate to wake sleepy NZ career diplomats and trade officials up to the real world.

    Even Paul Buchanan agrees on this:

    I’m all for good relations with Beijing, and my children are getting private tuition in Mandarin as a recognition of the growing importance of that relationship, but my experience at a political level leaves me with few illusions that Sir Humphrey in NZ is as astute as he needs to be when it comes to Chinese ambitions.

    PS..was just perusing the James Riady story I wrote 12 years ago…and I think this passage shows MFAT was as dumb then as it possibly remains now (all of the following is from the article):

    …”Finally and most importantly, US intelligence agencies report that one of Mr Riady’s chief business partners, China Resources, is an intelligence gathering agency of the communist Chinese Government.”

    It is this revelation that poses a grave problem for the New Zealand Government. Intelligence briefings prepared for the then Prime Minister Jenny Shipley and released to Investigate do not reveal any link between China Resources and Chinese Intelligence. Indeed, the New Zealand briefing reads as though it could have been prepared by Chinese Intelligence, judging by its innocuous contents:

    “The Lippo Group has a strategic position in China and Hong Kong with substantial investments and relationships with powerful business and government people and organisations.

    “It owns 49% of the Hong Kong Chinese Bank with the remaining 51% held by China Resources (Holdings) which is a wholly-owned enterprise of China’s Ministry of Foreign Trade and Economic Cooperation.”

    Which raises the question: was the New Zealand Government sucked in to beginning a relationship with James Riady on the basis of flawed intelligence?

    What is the ongoing implication of that if such flaws are not corrected?

    And just how bad was the NZ intelligence?

  2. Hi Ian,

    The Security Intelligence Review Committee (SIRC or the Committee) was established in 1984 as an independent, external review body which reports to the Parliament of Canada on the performance of the Canadian Security Intelligence Service (CSIS or the Service). The current members apart from the director are not civil servants but respected independent members of the public so the analogy of a ‘Yes Minister’ situation is highly unlikely. Recent media reports on Operation Sidewinder and the fact they may be ” singing the same song today that they were a decade ago”, is not a confirmation that Sidewinder had substance. However that is not to say there is none. A former Liberal MP says former Liberal leader Michael Ignatieff stopped him from calling witnesses and submitting evidence in a parliamentary hearing last year that would have pointed to Chinese influence on Canadian politicians. If Canada is indeed heavily influenced by China, it appears to have done them little good in regards to trade and political standing with China.
    I am sure that NZ intelligence, civil service and politicians are well aware of how China plays the game, and how to respond to it and possible equal and or even outplay them at it. Internationals relations is very akin to marriage you have to trust each other as the relationship matures and deepens but at the same time not be willfully blind to actions of the other which are contrary to that relationship and which endanger it.

  3. Hi Brian

    As explained in the article, the intel report was leaked to us from overseas, but I do know the leaker personally and have reason to trust his judgement.

    It ties in with work I have personally done on Chinese Red Army front companies (see ).

    I also sourced a number of recent media reports on Operation Sidewinder and they’re singing the same song today that they were a decade ago – despite the official report. If you ever watched “Yes Minister” you’ll know that ‘official reports’ generally deliver what their Ministers seek. As a former adviser for Cabinet in the External Relations and Trade portfolio with a ‘secret’ security clearance, I have a little bit of inside experience in the diplomatic arena, and Investigate maintains excellent sources within the intelligence industry.

    However, to quote one newspaper report in its entirety from 2008:

    One man’s China crusade

    By The Ottawa CitizenAugust 25, 2008

    For Canadian diplomat Brian McAdam, it wasn’t that he had uncovered the lucrative sale of Canadian visas during his posting at Canada’s Hong Kong consulate.

    Both Canadian and Chinese consular staff, he says, were selling visas to members of the Chinese mafia and Communist China’s intelligence service. The price, he heard, ranged from $10,000 to $100,000 per visa.

    It wasn’t that reports he sent to his bosses in Canada — details on murderers, money launderers, smugglers and spies trying to enter Canada — were met with silence or mostly destroyed.

    It wasn’t dozens of threatening calls — “Stop what you’re doing or you’re going to find yourself dead” — from Triad members during his 1989-1993 stint in Hong Kong.

    What finally broke him down, he says, was “the incredible feeling of betrayal from my colleagues. I’d worked with these people for years.”

    “It goes to your very soul,” he says. “It is a spiritual crisis. It is a psychological breakdown.”

    There was the day he got a phone call from his Hong Kong Police Department source, who was wiretapping a Triad kingpin.

    “What shocked the Hong Kong policeman was that the Triad member had phoned someone in the
    Canadian immigration minister’s office in Ottawa,” says Mr. McAdam.

    “The officer commented: ‘With that kind of relationship, you’ve got a really serious problem.’ ”

    What shocked Mr. McAdam was what the officer said next: The Canadian reassured the Triad boss, “Don’t worry about McAdam and what he’s doing. We’ll take care of him.”
    And, says Mr. McAdam, they did.

    Immigration Canada offered him a good new job in Ottawa. He returned — and found that his ostracism was complete. His 30-year career in Europe, the Caribbean and Asia was over.

    That stunning moment of clarity shut him down, physically and mentally. After two years on medical leave, swinging between hypersomnia — sleeping 20 hours a day — and insomnia, he says he finally did what his bosses and almost all of his co-workers wanted. In 1993, at age 51, he took early retirement.

    Though bereft of job, he says, “I felt free of a horrible group of people.”

    “Ill, depressed and unemployed,” he says, “I knew what I’d discovered was profoundly important.”

    In his 850-page manuscript –working title The Dragon’s Deception — he writes: “I was mocked, demeaned and threatened in a hostile environment while dealing with some of the world’s most ruthless criminals. Staff in both Hong Kong and in Ottawa gave copies of my confidential reports about some of the criminals to the gangsters themselves, and that greatly put my life at risk. I received death threats for a number of years but no one has ever been concerned about my safety. The big question (was): Why did Canadian diplomats in Hong Kong and bureaucrats in Ottawa do whatever they could to destroy my work and myself?”

    As he tells it, around that time, he was formulating the idea of a formal investigation to verify and enlarge his findings in Hong Kong. By 1995, a dozen CSIS and RCMP officers formally launched their first joint project: Operation Sidewinder

    Concealing his ill health, Mr. McAdam supplied the team with extensive documentation of China’s criminals and the Communist government’s ambitious program of acquisition, espionage and political influence in Canada and around the world.

    The RCMP’s own more narrow investigation into Mr. McAdam’s discoveries — separate from Sidewinder — had begun in 1992. They probed incidents of corruption but limited themselves to locally engaged staff — not Canadians.

    A seven-year investigation ensued. Seven RCMP investigators came and went. “As soon as one (Mountie) would investigate, they’d pull him off,” Mr. McAdam says. “Another officer would come along, start to make discoveries and would be pulled off.”

    “I believe both probes (by the Sidewinder team and by the RCMP) had considerable political interference to shut them down,” says Mr. McAdam, “and it seemed to be coming from the highest levels.”

    Mr. McAdam credits David Kilgour, then Liberal MP for Edmonton-Strathcona and secretary of state for Latin America and Africa, for his persistent letters. Mr. Kilgour sent his first letter directly to then-prime minister Jean Chrétien asking for a public inquiry — which Mr. McAdam had requested and continues to request. However, the government ordered an RCMP probe. Mr. Kilgour later sent letters asking the force to end its delays.

    Among the RCMP officers sent to Hong Kong was a 26-year veteran, Cpl. Robert Read, who, in 1996, spent months reviewing and corroborating many of Mr. McAdam’s findings. When RCMP Supt. Jean Dubé pulled him off the file in 1997, the Mountie publicly accused him of obstruction — a charge the RCMP dismissed. Supt. Dubé fired Cpl. Read.

    “They fired him to stop the investigation,” says Mr. McAdam. Cpl. Read took his case — the incriminating material, political connections between the Chinese government and Mr. Chrétien’s Liberal government, the evidence of a coverup — to the media.

    In 2003, an RCMP external committee confirmed Cpl. Read’s findings. It found the RCMP “consistently demonstrated a reluctance to investigate” and ordered the force to rehire him. The RCMP refused. Cpl. Read sued.

    Recently retired Giuliani Zaccardelli was RCMP commissioner at the time.

    In 2005, Federal Court Justice Sean Harrington heard Cpl. Read’s case and upheld the firing for “lack of loyalty to the government.” In 2007, the Supreme Court of Canada refused to hear the case. Cpl. Read’s and Mr. McAdam’s stories are told on

    The Sidewinder report supported Mr. McAdam. It went further: “They found that crime members with ties to China’s military intelligence had invested billions in Canada,” says Mr. McAdam, “in high-tech, in computer companies, telecommunication companies.”

    A few days after Sidewinder’s final report was sent to CSIS in 1997, Sidewinder was shut down. CSIS disbanded the team and directed the investigators to destroy every document. Says Mr. McAdam: “It tells you there’s a coverup going on.”

    The Sidewinder team destroyed hundreds of pages of Mr. McAdam’s research, his books and his reports.

    “I trusted I’d get it all back” — he laughs at the idea of having to make copies to protect his material from Canadian law enforcement. “I never dreamed this would be the outcome — all kinds of material, just gone.

    “The (Sidewinder) team leader was demoted after submitting the report. He resigned. And CSIS’s almost sole China expert also resigned in disgust.

    “At least six investigations by the U.S. Senate and Congress, from 1997 to 2003, corroborated Sidewinder’s findings,” he says. “Though senior management at CSIS maligned the
    report as ‘rumour-laced conspiracy theory,’ others saw it as ‘groundbreaking’ and ‘years ahead of the curve.’ ”

    Ward Elcock, who retired in 2004, was CSIS director at the time.

    Since then, the FBI has named China as the biggest intelligence threat to the U.S., says Mr. McAdam.
    And Canada, he says, is now known as “one of the world’s centres for Chinese organized crime and espionage.”

    Last year, CSIS director Jim Judd testified before the Senate that nearly half of all spies from 15 countries who operate in Canada work for China — and consume half his counter-espionage resources.

    Mr. McAdam says: “I feel better than I have for 15 years. I feel fantastic, tremendous. I feel back to normal.”

    What saved him? “The love of my wife, Marie. I’d never be alive without her. She nurtured me and cared for me beyond belief.” And, he adds, determination. “I wanted to stop Chinese criminals and spies from trying to destroy our country.”

    These days, although he’s never called upon by his own government, Mr. McAdam has started to do international consulting work on global operations — including Canada — of the increasingly strong partnership of Chinese intelligence and organized crime.

    “I’m on a crusade,” he says. “I don’t know how to describe it any other way. I don’t think we should be selling our country to China.”

    Next week: McAdam: China’s Top 5 Myths

    © (c) CanWest MediaWorks Publications Inc.

    If that’s not enough, try this Canadian media commentary from 2010, quoting no less a personage than the head of the CSIS:

    Here is an old adage from the world of espionage.
    It goes something like this.
    Consider a beach the target country and the sand on it the coveted intelligence.
    The Americans would use satellites to probe from high altitudes what they can make of it.
    The Israelis would creep up onto the beach at night in inflatable boats and grab a bagful for analysis.
    The Chinese would declare a national holiday, send everyone to the beach so they can all pocket a bit of sand and bring it home.

    As former FBI analyst Paul D. Moore puts it; “In China’s model, anyone and everyone is a potential intelligence asset.”

    The quicker our elected officials understand this, the safer Canada will be.

    Richard Fadden, the director of the Canadian Security Intelligence Service was trying to articulate this fact when he warned in a CBC interview that some of our elected politicians, including municipal officials in B.C., are under the influence of foreign governments.

    “There are several municipal politicians in British Columbia and in at least two provinces there are ministers of the Crown who we think are under at least the general influence of a foreign government,” said our top spy before being forced to backtrack on his comments because it triggered a tongue lashing from the Chinese-Canadian community and politicians from coast-to-coast.

    What Fadden was saying was not new because it has been said many times before in reports, analysis and interviews across the globe.

    It is however alarming that our naïve politicians don’t and won’t believe what Fadden said is happening.
    So they demand for proof, fully well knowing that evidence and human sources gathered in the intelligence game, will for the most part always be kept confidential.

    The Asian Pacific Post and its sister papers have for the past decade chronicled incidents, interviews and reports to show how China’s agents of influence have been infiltrating Canada.

    We have shown how an assortment of front men from tycoons to Triad members infiltrate Canada’s business, political and financial infrastructure.

    Despite this litany of reports the naïve, gullible and influenced keep their heads buried in the sand, with some camouflaging China’s efforts as engagement, instead of infiltration.

    The recent comments by CSIS boss Fadden also prompted a terse reply from Prime Minister Stephen Harper’ office which stated it did not know what our top spy was talking about.

    Obviously no one checked Harper’s attack at the Liberals back in June 2005 when he accused the Liberal government of the day of not addressing the presence of Chinese industrial spies during question period.

    “Today the former head of the CSIS Asia desk confirmed reports from defectors that close to 1000 Chinese government agent spies have infiltrated Canada,” Harper said then.

    Harper quoted the former CSIS official, Michel Juneau-Katsuya, as believing Chinese spies cost Canada $1 billion every month through industrial espionage. Juneau-Katsuya oversaw the CSIS Asia desk during the mid-1990s.

    How soon we forget. That’s perhaps why Chinese spies like us.

  4. Ian this is not up to your usual standard. I wonder just who put you up this!

    The Sidewinder Report and its substance was investigated by the Canadian Security Intelligence Review Committee of 1999-2000. Its findings were;

    The principal assertions in the media were:

    that the goal of Sidewinder was to gather and analyze intelligence about efforts by the Chinese Government and Asian criminal gangs to influence Canadian business and politics;
    that the Project was terminated before completion because the Service anticipated political resistance;
    that CSIS improperly destroyed all copies of Sidewinder’s final report, as well as drafts, correspondence and other related documents;
    that ending the joint project in 1997 was premature and subsequently hobbled the government’s ability to deal with emerging threats to the country;
    that the Sidewinder team’s request for additional resources, and its recommendation to CSIS/RCMP management to launch a formal investigation into the alleged activities were answered by the project being terminated and the team being disbanded;

    After a thorough review process the committee found;
    Main Points

    The Committee found no evidence of political interference as alleged. None of the documents or records reviewed, interviews conducted or representations received evidenced such interference, actual or anticipated. Project Sidewinder was not terminated; it was delayed when its product was found to be inadequate.
    With respect to the Sidewinder first draft report, we found the draft to be deeply flawed in almost all respects. The report did not meet the most elementary standards of professional and analytical rigour. The actions the Service took to ensure that subsequent products of its collaborative effort with the RCMP on Project Sidewinder would be of higher quality were appropriate.
    The Committee found no evidence of any substantial and immediate threat of the sort envisaged in the first Sidewinder draft, no evidence that a threat was being ignored through negligence or design, and no evidence that the Government had not been appropriately warned of substantive threats where such existed. Both CSIS and the RCMP continue to investigate similar threats separately.
    The Committee found no indication that the disagreements between CSIS and the RCMP, which arose during the course of Project Sidewinder, had caused, or were symptomatic of, difficulties in other areas of the inter-agency relationship.
    The Service disposed of what it regarded as “transitory documents” related to the Sidewinder first draft report. It is unable to locate other documents the Committee regards as clearly non-transitory and has stated that these were not disposed of but rather “misfiled.” However, the Committee does not believe this lapse had a material impact on the events surrounding Project Sidewinder; nor is there any evidence that raw information, kept in Service files and in part used by the Sidewinder analysts to compile their first report, was disposed of or altered in any manner.

    Was There Political Interference?

    The Committee could find no evidence of political interference as alleged. None of the documents or records we reviewed or received evidenced such interference, actual or potential. None of the CSIS and RCMP employees we interviewed had knowledge of political interference or interference by other agencies in Sidewinder or in other related investigations. None of the other parties who came forward to contribute to our review had knowledge of interference or offered substantiating information of any kind.

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