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CONTENTS SEPTEMBER 21, 2000

Click. TRIAD NATIONAL SECURITY THREAT.

Click. EMERYVILLE SCHOOL CHIEF UNDER INVESTIGATION.

Click. Alameda County Forced to Rescue Emery Unified District which receives loan, supervision.

Click. PLEASANTON BOY ESCAPES FROM CAR TRUNK TO EVADE KIDNAPPER.


EMERYVILLE SCHOOL CHIEF UNDER INVESTIGATION.
San Francisco Chronicle 9/20/00

(09-20) 14:29 PDT EMERYVILLE, Calif. (AP) -- Emeryville's school superintendent is being investigated for possible mismanagement of funds.

J. L. Handy's credit card use is under investigation by an Alameda County civil grand jury, as is the use of millions of dollars of voter-approved bond money.

Alameda County school officials took over Emery Unified School District this summer. The move came after they learned the district was $900,000 dollars in debt and could not afford to pay teachers.

``I will not say I don't have any suspicions of illegal behavior,'' said Alameda County School Superintendent Sheila Jordan. Jordan says the state is looking closely at the district.

Handy, who could not be reached for comment Wednesday, has been described as dictatorial and secretive by some, hardworking and thoughtful by others. He recently ordered $600,000 worth of cost-cutting measures in classrooms, leaving many teachers to pay for their own textbooks.

Handy was fired as superintendent of Compton schools after similar charges of funds mismanagement arose in 1992.


Alameda County Forced to Rescue Emery Unified District receives loan, supervision.

San Francisco Chronicle June 20, 2000

The tiny, three-school district serving Emeryville has run $600,000 into the red, prompting a takeover by county fiscal experts.

The Alameda County Office of Education announced yesterday it will loan the Emery Unified School District up to $600,000, but on the condition that a county fiscal adviser will approve or deny all district spending for the next three years.

Emeryville's problems began with an unexpected 10 percent enrollment drop, and were compounded when the district hired new administrators for each school, said county schools Superintendent Sheila Jordan.

The school district is the second in Alameda County to fall into financial trouble this year. Last fall, the county took control of San Leandro schools and has since brought the district back to health.

Emeryville -- which receives more state funding per student than the state average and the second- highest amount in the county -- could take up to three years to right itself, Jordan said.

The district based its budget on an expectation that 980 students would come to school this year, about the same number of students that attended the previous year. But only 890 students showed up, the district's first enrollment drop in more than a decade.

``There is a drain out of the Emery schools because the test scores are so low,'' said parent Janet Guastavino, who secured a district transfer to send her son to kindergarten in Berkeley in the fall.

``I'd rather contribute to the community by sending my kids to the local schools,'' she said, ``but when the Academic Performance Index came out, it made public what many of us fear -- that Emeryville provides a safe haven, but it isn't educating the kids.''

The state index uses test scores to rank California schools against each other on a scale of 1 to 10 from worst to best. This year, the elementary, middle and high school in Emeryville ranked a 4, 3 and 1, respectively.

Superintendent J.L. Handy did not return calls yesterday, and spent the afternoon in a budget meeting with Jordan, schools employees and parents.

Jordan said Handy is very interested in working with the county, and wants to make cuts as far away from the classroom as possible.

County budget experts will help Handy cut expenses to build a $300,000 cushion for emergencies within its projected $7 million budget for next year. The county requires small districts such as Emery to have 4 percent of their budget set aside as a reserve.

State schools chief Delaine Eastin was surprised that the district was unable to balance the books even though it has one of the highest per-pupil funding rates in California and sits amid a retail and residential construction boom.

``Emeryville shouldn't be having this much trouble,'' she said.

The county issued a warning to Emery Unified in April, and gave the district two months to correct budget shortfalls. During that time, the state announced a $1.8 billion windfall for California public schools, of which $350,000 will go to Emery Unified. Even so, the district still will not be able to stay afloat for the coming school year, Jordan said.

A teacher who requested anonymity said there is a growing sentiment among the district's 51 teachers that Handy should step down.

Handy came to Emeryville in 1992 from the Compton Unified School District, where the school board voted to oust him amid allegations of mismanagement and dereliction of duty.

He left that district with a budget that required $5 million of spending cuts and layoffs to balance. During his two-year tenure in Compton, test scores were flat and auditors penalized the district $1 million for tax-filing errors.

A few months after Handy was removed from his post, the Legislature placed the district under state control, approved a $10.5 million state loan and stripped the school board of its powers.

Prior to Compton, Handy worked at Sacramento City Unified. He left Sacramento after being demoted from assistant superintendent to a middle school principal.


Boy says he was abducted after school

CONTRA COSTA TIMES STAFF Published Thursday, September 21, 2000

PLEASANTON -- Police here are investigating the account of an 11-year-old Pleasanton boy who told his mother he was abducted Tuesday while walking home from school.

The boy, a student at Hart Middle School, told police that a man dressed in white clothes and wearing a black ski mask and dark leather gloves grabbed him from behind about 4 p.m. near Willow Road and West Las Positas Boulevard.

The boy said he was then thrown in the trunk of an older model black car. When the car came to a stop, the boy told police that he grabbed at wires and was able to open the trunk and escape near the neighborhood where he lives.

He then ran home and alerted his mother, who called police. The boy said he landed on his backpack when he jumped out of the car and was not injured.

Police said the boy described the license plate as white with green printing and had the letters FC330, but not necessarily in that order. The boy also said the expiration tab was June 2001.

Pleasanton school officials responded to the report by calling nearly 2,000 parents of Hart Middle School and Donlon Elementary School students.

"We're taking this very seriously," said Jerri Long, Pleasanton school district spokeswoman. "We're hoping parents will talk with their students about general safety."

Aside from the personal phone calls made by parent volunteers to many families, a recorded message and e-mail were also sent to the parents of Donlon and Hart students, encouraging them to have their children buddy up when walking, biking or riding the bus to school.

Police ask anyone with information to call Detective Robert Leong at 925-931-5100.


Triad national security threat
http://www.canoe.ca/CNEWSLaw0009/20_triad-sun.html

By RANDY RICHMOND-- London Free Press,  Wednesday, September 20, 2000

  A dangerous network of Chinese triads, the Communist government and Hong Kong tycoons have infiltrated all elements of Canadian society, threatening the country's national security, says a secret CSIS-RCMP report obtained by The London Free Press.

Backed by millions of dollars and thousands of followers, weapons and heroin are being smuggled into Canada while high-tech secrets, financial control and money are sent back to China, the report concludes.

Excerpts of the report -- code-named Sidewinder by the Mounties and the national spy agency -- were leaked to the media earlier this year. But the full 29-page report has never been released.

One copy of the report has also been obtained by the Canadian Alliance, which says it will raise the issue in the House of Commons.

"The Canadian public would be so astounded by this report they would find it unbelievable," Alliance MP Jim Abbott said in Ottawa yesterday.

Abbott said he would bring the issue to the Alliance caucus today.

"I see this is a nationally explosive issue that has tremendous implications corporately and politically from top to bottom."

The report says: "China remains one of the greatest ongoing threats to Canada's national security and Canadian industry. There is no longer any doubt that the Chinese Intelligence Service have been able to gain influence on important sectors of the Canadian economy, including . . . real estate, high technology, security and many others. In turn, it gave them access to economic, political and some military intelligence of Canada.

"The great majority" of immigrants from China are law-abiding citizens, Sidewinder notes.

The Alliance has pressed the Liberals for answers about the report, suggesting political interference killed the Sidewinder document.

"We finally have a hard copy of the report," Abbott said. "There is a very malevolent influence against the political process."

The report, whose official title is Chinese Intelligence Services and Triads Financial Links in Canada, was supposed to be destroyed after CSIS officials decided to tone down the conclusions in a revised document called Echo.

CSIS officials have insisted Sidewinder was buried because it was nothing more than conspiracy theories.

Other intelligence sources say political pressure forced CSIS to hush the Sidewinder report.

The RCMP complained to CSIS about the revised version and the controversy has ended up at the Security Intelligence Review Committee, an independent watchdog.

The committee has heard testimony about Sidewinder but has not released the original document, sparking accusations the release is being delayed until after Prime Minister Jean Chretien returns from a trip to China planned for this fall.

Ex-government officials who confirmed the authenticity of the report Monday in Ottawa were shocked to learn a copy still existed.

The report, based on several case studies, suggests some stunning conclusions.

The report suggests the influence of Chinese leaders on Canada is growing in several ways:

- Through control of Canadian companies by Chinese tycoons with links to triads and the communist government. More than 200 Canadian companies were under Chinese control in 1997, the report says.

- Through companies set up by Chinese investors. "The Chinese government is trying to gain influence on Canadian politics by maximizing their presence over some of the country's economic levers."

- Through financial contributions to Canadian political parties. "The triads, the tycoons and the ChIS (Chinese Intelligence Service) have learned that a quick way to gain influence is to provide finance to the main political parties. Most of the companies identified in this research have contributed, sometimes tens of thousands of dollars, to the two traditional political parties, that is, the Liberals and Progressive Conservatives."

- Through business and social connections with top-level Canadian political and business leaders: "Having bought significant real estate holdings and established businesses in Canada, China has obtained access to influential figures who are now or once were active at various levels of Canadian society."

Fifteen case studies form the guts of Sidewinder. They examine the ownership links of three multinational companies, five banks and financial institutions, four high-tech companies with several more subsidiaries, five media companies, one food distribution company, five hotels and real estate
firms.

Taken alone, each company's relationship to Chinese political leaders, business people or triads is not threatening, Sidewinder concludes.

But the connections show power in the hands of a few people with huge influence on Canadian politics, the report says. For legal reasons, The London Free Press cannot reveal all the company names.

Here are some of the case studies:

- The Chinese, state-owned China International Trust Investment & Company (CITIC), which has a subsidiary in Canada, has spent about $500 million to buy a Canadian pulp mill, petrochemical company, real estate and hotels. CITIC also has connections with at least one large Canadian corporation.

- Large amounts of arms manufactured by a CITIC-controlled company have been
confiscated on Mohawk reserves.

- Officials from two CITIC-controlled firms were investigated in the U.S. after 2,000 AK-47 assault rifles and other weapons, believed destined for native warrior groups, were found in a California warehouse.

- A financial firm and resource company under Chinese control donated more than $120,000 to the Progressive Conservative and Liberal parties in the 1990s. A motion picture company investigated by police for ties to the triads has also donated money to the two parties.

- The parent company of a Canadian bank has on its board of directors a man identified by police as having triad connections.

- An individual with high-ranking triad connections is the principal shareholder in a high-tech company in Ontario. Among the clients of the high-tech firm's subsidiaries are several federal government departments.

- A state-controlled Chinese company has controlling shares in a Canadian firm involved in worldwide security systems.

- Hong Kong triads control the Chinese entertainment industry. Several key players in the Chinese entertainment and media industry in Canada are known to associate with triads and Chinese intelligence contacts.

- Triad members are involved in Canada's food industry and one company with branches across North America is suspected of importing heroin from Hong Kong. Company officials maintain regular contact with Chinese military and trade representatives in Canada. The triads use companies in Canada to launder money from the drug trade, the report states.

- Chinese tycoons and CITIC own large chunks of real estate and hotel chains in key urban centres, giving them great influence in local politics and development.

- "All areas of the Canadian economy are targeted, but high technology is at most risk," the report says. "Several cases of theft of Canadian proprietary information and/or technology have been reported to and investigated by Canadian authorities." For example, Ontario Hydro believed a Chinese worker stole nuclear technology information.

And a Chinese employee of a major computer company was accused of copying
information onto a disk to send back to China.

Also, a Canadian company alleges a former employee who had served in the Chinese military stole information on energy technology and sold it to the Chinese government.

- A company owned by a Chinese-Canadian sponsored a so-called business delegation to Canada. The delegation was made up of Ministry of State Security Officials who came to Canada to undertake an intelligence operation.

Another delegation that came to Canada under the guise of business was made up of officers from China's People's Liberation Army, hoping to buy communications technology.

- Many companies in Canada have been set up by the Chinese Intelligence Service to spy.

Sidewinder warns that businesses are a key way for China's military to get Canada's research funding or classified contracts from the government. Shell companies and the exchange of specialists help Chinese leaders gain information about Canadian technology and economics.

SIDEWINDER RECOMMENDATIONS

1. An expanded task force with analysts from the RCMP, CSIS, Immigration Canada and Revenue Canada continue researching the control of Chinese companies over the Canadian economy and what influential Canadian leaders sit on the board of Chinese companies.

2. Investigators determine the ownership of companies that have installed security systems for the federal government and Crown corporations.

3. Investigators get more details on contributions to Canadian political parties by Chinese companies established in Canada.

4. Investigators analyse the involvement of triads and the Chinese government in the Chinese media in Canada.