MIXING BUSINES WITH SPYING
By Scott Shane (c) 1996, Baltimore Sun
At least once a day, a CIA courier stops by the Department of Commerce in downtown Washington with a packet of top-secret information, gathered around the globe by satellites picking up phone calls, agents inside foreign governments and American spies posing as businessmen abroad.
The Central Intelligence Agency packets have gotten fatter in recent years, as U.S. spies have shifted their focus from Soviet missiles to international trade. And the nuggets of information inside can be used not only to make policy but to make a buck.
In the case of John Huang, the international businessman turned Commerce Department official turned Democratic Party fund-raiser, there is no evidence or allegation that he misused secret intelligence he was given on the job.
But the scrutiny of Huang's position at Commerce has opened a rare window on the department's growing role as a link between the intelligence agencies and the business world.
"There's greater potential for conflict of interest when the information can be used for direct economic benefit," said Jeffrey T. Richelson, author of several books on U.S intelligence. "You have prohibitions on insider trading on the stock market. This is just a different kind of insider information."
Security laws prohibit passing secret intelligence directly to outsiders who lack the proper clearance. But former intelligence officials and other experts say tips based on spying nonetheless regularly flow from the Commerce Department to U.S. companies to help them win contracts overseas. And there are few specific guidelines governing the practice.
"I think the government has got a major weakness there," said Loch K. Johnson, a historian and author who served on the staff of the Brown Commission, which recommended intelligence reforms last March. "At Commerce, there's no code or book to consult to say when and what information can be passed to a U.S. company."
Huang served from 1994 until early this year as the principal deputy assistant secretary of commerce for international economic policy. In a deposition this week, Huang denied that while at the Commerce Department he had "any commercial dealing, any involvement" with his former employer, the Indonesia-based Lippo Group, which paid him nearly $900,000 in the year before he took his government job.
But Huang, like other top political appointees at the Commerce Department, came from and returned to a private sector where a morsel of information can be turned into a feast of profit. Documents released by the department this week underscore how routine the mingling of Commerce officials and CIA analysts has become.
One such document consists of minutes from an August 1994 Commerce Department meeting attended by Huang to identify major contracts open for bid in Indonesia in order to help U.S. companies win the work. A CIA employee, Bob Beamer, spoke at the meeting; five of the 16 people on the routine distribution list for the minutes were from the CIA.
Commerce officials say Huang had a top-secret security clearance and received weekly intelligence briefings. The briefings were conducted by the department's Office of Executive Support -- a new name for the office previously known as Intelligence Liaison -- which receives information from the CIA and distributes it to officials with the proper clearances.
Since Huang was the principal deputy to the assistant secretary of commerce for international economic policy, his interests "covered the world" but had an East Asia focus, the Commerce Department statement said. Huang "was provided copies of relevant intelligence material,"
"The specter it raises is that Mr. Huang, after getting his intelligence briefing, could have picked up the phone and called his old colleagues at Lippo and said: `Why don't you sell this, or buy that, based on what I heard?' " said Matthew M. Aid, a Washington researcher writing a book on the National Security Agency, whose eavesdropping provides much of the most important commercial intelligence.
For most Asian and European governments, such sharing of intelligence with corporations "is a very common practice," Aid said. "If you're in the Suharto government, you see increasing the wealth of Lippo as increasing the wealth of Indonesia."
Johnson, the staff member of the intelligence reform commission chaired by former Defense Secretary Harold Brown, said providing intelligence-based information to a foreign company would always be inappropriate, if not illegal. But officials at the departments of Commerce, Treasury and State sometimes pass information to U.S. companies without revealing the intelligence source, he said.
If, for instance, a government official learned that a foreign competitor was about to win a contract sought by a U.S. company, "someone in Commerce might call a U.S. executive and say, `Look, you might have a better shot at that contract if you sweetened your bid a little,' " Johnson said. "They pass on the information. But they usually do it in a very veiled fashion."
Former CIA Director Robert M. Gates said the decision to share with a company information derived from spying should never be made by an official on his own.
"The decision to assist a U.S. company should be made openly, on a policy level," Gates said. "Among other things, you have to find a way to sanitize the material to protect sources and methods."
William E. Odom, a former NSA director who is now at the Hudson Institute in Washington, said the intelligence agencies and the Commerce Department collaborated throughout the Cold War to prevent U.S. companies from exporting products with military applications to the East Bloc.
"You could use that information to catch the bad guys," Odom said. "But you don't make money off that kind of information."
Now, with Commerce officials trying to turn the billions spent on intelligence to the benefit of U.S. business, "it doesn't take a great deal of imagination to see the potential for abuse," Odom said. "You finally just have to have honest officials."
Originally Published on 11/01/96 -- Copyright 1996 The Baltimore Sun