Chinese businessman Li Ka-shing, whose $13
billion dollars and control of 15 percent of Hong Kong’s market capitalization
through behemoth Cheung Kong Holdings render his name remarkably onomatopoeic, is
making the world better for Chinese spies, smugglers, soldiers, and two Presidents
of the United States. Several officials from the Reagan and Clinton administrations,
including Defense Secretary William Cohen
and Assistant Defense Secretary Richard Perle have paved the way for him. Li’s
companies, along with the People’s Republic of China, operate the ports on both ends
of the Panama Canal and, through a no-bid contract, the screening of U.S.-bound
ships in the Bahamas for nuclear material.
A former Reagan government official named Nancy Dorn spent the Clinton years with lobbying firm Hooper, Owen, Gould, and Winburn, where she spearheaded Li’s successful campaign to lease the Panama Canal ports. (Dorn is now the deputy director of the Office of Management and Budget.) Congress and regulatory agencies stepped in to keep Li from controlling U.S. telecommunications networks and the largest port on the West Coast, but he still found his way around the regulation to keep slices of both. Li has accomplished all of this despite alliances with Chinese companies accused of espionage and smuggling. Equally as alarming are his extensive personal ties to the Chinese government and military. “Just as British imperialism followed trade,” says Australian journalist Peter Zhang, “Chinese military intelligence always follows Li.”
Li’s connections to the Chinese government and military are well documented. Trent Lott, in fact, called Li Ka-shing’s company, Hutchison Whampoa, an “arm of the PLA [People’s Liberation Army].” Documents from U.S. embassies all over the world have shown that Li: helped the PLA finance communication networks, accepted $400 million from the Chinese government for Hutchison Whampoa, and entered a real estate deal with Chinese president Jiang Zemin. U.S. Commerce Department documents show Li owns 25 percent of a firm run by the Chinese air force and one-third of Asiasat, which is owned in part by the Chinese army. Li founded the China International Trust and Investment Corporation (CITIC), which the RAND Corporation claims is a front operation for the PLA. Li has also financed satellite deals between American company Hughes Network Systems and China Hong Kong Satellite, a company owned in part by the PLA. (In 1999, Hughes passed on unauthorized missile launch information to China that can also be used to improve nuclear missiles. So did Loral Corp., which was fined $14 million and was later sold to giant defense contractor L-3 Communications.) Judicial Watch, after filing a FOIA report, quoted a U.S. army intelligence update that said, “Li is directly connected to Beijing and is willing to use his business influence to further the aims of the Chinese Government. He…has compelling financial reasons to maintain a good relationship with China’s leadership.”
Despite these warnings, Hutchison Whampoa took control of two ports on the Panama Canal in March, 1997, just two years before the U.S. turned the canal over to Panama. Leading Hutchison’s lobbying efforts was Nancy Dorn, a former assistant in the Reagan and George H.W. Bush administrations. She would later serve as national security advisor to Rep. Dennis Hastert (R-IL), secretary for legislative affairs for Vice President Cheney, and Deputy Director of the Office of Management and Budget for President Bush. When the port takeover raised criticism of China’s potential influence over Panama, the Pentagon dismissed the critics’ concerns. (William Cohen had just been sworn in as Defense Secretary two months earlier. He has since launched a company with three former PRC government officials on its board.)
China Resources Enterprises (CRE) has a ten percent holding in Panama Ports Company, Hutchison’s Panama subsidiary. CRE is the commercial arm of a PRC agency. In 1999, Rep. Dana Rohrbacher (R-CA) said CRE was really a front for Chinese intelligence agencies, citing testimony from Sen. Fred Thompson (R-TN) during a Senate Government Affairs Committee hearing that CRE is “an agent of espionage -- economic, military and political -- for China." CRE is also alleged to have been involved in the $50,000 in illegal campaign donations that made their way from China to Bill Clinton and Al Gore, a harbinger of the major China-related corruptions that would sully the PRC-friendly administration and result in 17 convictions.
Hutchison Whampoa is closely affiliated with the China Ocean Shipping Company, or COSCO; a picture on COSCO’s web site from September 6, 2006 features COSCO’s CEO meeting with Li Ka-shing. In 1997, COSCO entered a deal to lease a 145-acre container terminal on a former naval base in Long Beach, California. An amendment to a defense budget the next year prohibiting contracts with companies affiliated with the Chinese government or military derailed the deal for good. Nonetheless, President Clinton intervened personally, to no avail. COSCO shipped missile and biological warfare components to Pakistan, North Korea, Iran and Iraq. And in 1996, U.S. Customs agents confiscated 2,000 automatic machine guns that were being smuggled into the U.S. on COSCO ships. COSCO has been called the “merchant marine” of the Chinese army—they have participated in military exercises.
In 2001, after everyone had forgotten about that debacle, COSCO built a new terminal at Long Beach and kept 51 percent of the lease.
In 2002, Hutchison Whampoa entered a deal with Singapore Technologies Telemedia for a joint, $750 million purchase of Global Crossing, a telecommunications company that had recently filed for bankruptcy after an Enron-sized scandal. (The company had received a $450 million federal contract, but lost it when its financial troubles came to light. Global Crossing founder Gary Winnick once allowed former Democratic National Committee chair Terry McAuliffe, who had performed “consulting services” (i.e., introducing Winnick to President Clinton) for Global Crossing, to purchase $100,000 in stock before the company went public. McAuliffe cashed out several years later for $18,000,000.) Richard Perle, a former Reagan assistant defense secretary, had a lobbying position with Global Crossing and advocated the deal. He was paid $125,000, with an additional $600,000 to come if the sale was approved. Perle resigned from the Defense Policy Board, a collection of experts and former government officials with access to classified information, when the deal came to light, and he turned down Global Crossing’s compensation. (Former Defense Secretary William Cohen was on Global Crossing’s board, as well, but he left a year before the proposed sale to launch The Cohen Group, a consulting group that helps companies explore market opportunities in…China.)
Alarmed by Hutchison’s ties to the Chinese government and military, the Committee on Foreign Investment in the United States (CFIUS) stepped in to review the sale. CFIUS is a cross-agency panel chaired by the Secretary of the Treasury; its members include the Attorney General, Secretary of Defense,the United States Trade Representative and the Secretary of Homeland Security CFIUS reported that it “considers the type of large, “backbone” network that Global Crossing runs to be extremely sensitive because of the disastrous consequences of a network disruption.”
Hutchison Whampoa dropped out of the deal. President Bush then stepped in personally to approve the sale of a 61.5% stake to Singapore Technologies Telemedia for $250 million. This does not mean, however, that Ka-Shing has no influence on Singapore. A senior consultant from Singapore Technologies still sits on the board of Hutchison Whampoa. Also, one of the largest companies in China joined a Singapore company in 2002 for a shipping and warehousing venture. Legend Group Holdings, a Chinese corporation, partnered with Singapore’s APL Logistics for a business that includes “international ocean…transportation, freight forwarding, warehousing, and customs house brokerage.” And in April 2006, PSA International, a Singapore port operator, bought a 20 percent stake in Hutchison Whampoa. PSA, like Singapore Technologies, is a wholly-owned subsidiary of Temasek Holdings, the investment arm of the Singapore government.
And although Hutchison technically dropped out of the Global Crossing deal in the U.S. in 2003, the two companies had launched a 50/50 venture to pursue Internet and telecommunications opportunities in Hong Kong in 1999.
In late 2004, Li Ka-shing invested $90 million dollars in Shanghai-based Grace Semiconductor. Jiang Mianheng, son of the former Chinese president (and Li Ka-shing real estate partner), owns Grace. In 2002, he hired the U.S. President’s brother Neil Bush for a consulting gig. Neil Bush had no background in semiconductors, but he was paid $2 million in company stock over five years, plus $10,000 for every board meeting attended. Just months later, the U.S. became more permissive in allowing Chinese semiconductor companies to acquire military-grade fabrication machinery. In a 2005 hearing, the Commerce Department raised security concerns about China’s semiconductor technology being applied to military weaponry or systems.
Hong Kong-based General Enterprise Management Services also invested in Grace. Li is an investor in GEMS, and Henry Kissinger is an advisor. The overall investment was intended to improve the output of one of Grace’s fabricators from 25,000 eight-inch wafers per month to 33,000. The investment also went toward Grace's initial public offerings in Hong Kong and the U.S.
By 2006, Li Ka-shing had the ports at the Panama Canal, as well as in Europe, Africa, Asia, and the Middle East. He had a major investment in a semiconductor company that was run by the son of an ex-Chinese president—who had hired a brother of the U.S. president—and stood to benefit the Chinese military through relaxed U.S. semiconductor standards. He didn’t have Global Crossing’s fiber-optic network in the U.S., but he did have 15 percent of the entire market capitalization in the Hong Kong Stock Market. What else lay ahead?
In March, 2006, shortly after controversy erupted over a plan to let United Arab Emirates company Dubai Ports World manage important U.S. ports, the U.S. National Nuclear Security Administration negotiated a $121 million dollar no-bid “second line of defense” contract with Hutchison Whampoa to screen U.S.-bound cargo for nuclear material at a port in Freeport, Bahamas. Although an embassy cable from the Bahamas in 1995 cited concern about smuggling if Li built a planned $80 million container ship terminal there, no U.S agents would be present for the screening under the current contract. Rep. Hastert, who had raised a stink over the Dubai Ports deal, didn’t have much to say about this one. Perhaps he had fond memories of Li Ka-shing from 2000, when Hutchison huckster Nancy Dorn was his foreign policy adviser. Sen. Charles Schumer was impressed, too. He toured a Hutchison port in Hong Kong. Looked good to him.
This isn’t the first negligence of possible threats from China on the part of NNSA’s director, Linton Brooks. Despite a finding by the Cox Commission that China successfully stole U.S. nuclear secrets over a 20-year span, Chinese spies got in right under his nose. In 2004, foreign hackers broke into the network at Sandia National Labs and stole sensitive data. An analyst named Carpenter tracked them down, and they appeared to be the same hackers that broke into Lockheed Martin—who manages Sandia for the federal government. It looked like they were breaking into other secure computer systems across the U.S. government and military, as well. Time Magazine said high-level officials at three agencies told them that the breach was serious, and another source said the FBI is “aggressively” investigating the involvement of the Chinese government. On his own time, Carpenter tracked the hackers from his home computer, and he shared his findings with the FBI. However, Sandia told him to stop immediately, since they only cared what happened on their computers. They ultimately fired Carpenter, and he filed a civil suit against them for defamation and wrongful termination.
Despite all the criticism, Li Ka-shing enjoys a reputation as a legitimate businessman. He has been awarded honorary degrees across the world, he is a Commandeur de la Légion d'Honneur in France, he is a Knight in England, and, perhaps most appropriately, he is a Grand Officer of the Order Vasco Nunez de Balboa in Panama.
- “White House Tipped Lawmakers to Port Story,” Associated Press, April 1, 2006, Ted Bridis
- “U.S. Hiring Chinese Co. to Scan Nukes,” Associated Press, March 23, 2006, Ted Bridis and John Solomon, http://apnews.myway.com/article/20060324/D8GHKOIOI.html
- “Breach at lab called significant,” Los Angeles Times, November 2, 2006, Ralph Vartabedian, http://www.latimes.com/news/printedition/asection/la-na-lab2nov02,1,1331718.story?ct rack=1&cset=true
- “The Invasion of the Chinese Cyberspies (And the Man Who Tried;
- to Stop Them),”Time, September 5, 2005, http://www.time.com/time/magazine/printout/0,8816,1098961,00.html
- The Exon-Florio Amendment, Institute for International Economics, www.iie.com
- “Tech Insider: A global government crossing,” Shane Harris, http://www.govexec.com/dailyfed/021102ti.htm
- “Will China's Domestic Chip-Making Subsidies Spark Semiconductor Downturn?” JACK LYNE, Site Selection Executive Editor of Interactive Publishing, http://www.siteselection.com/ssinsider/incentive/ti0412.htm
- “Clinton knew China's Panama play in 1996: U.S. Embassy cabled warning: Hutchison run by communists,” June 17, 2000, By Charles Smith, http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=20618
- “United States-China Commission Research Papers: Capital Markets Transparency and Security: The Nexus Between U.S.-China Security Relations and America's Capital Markets,” Adam M. Pener, William J. Casey Institute of the Center for Security Policy; June, 2001
- “At What Cost Did China Get Canal? - Brief Article,” Insight on the News, Sept 13, 1999 by J. Michael Waller, http://www.findarticles.com/p/articles/mi_m1571/is_34_15/ai_55821630
- “Possibility Emerges of OMB Director Daniels Running For Governor Of Indiana,” FederalDaily - May 5, 2003, http://federaldaily.com/federaldaily/archive/2003/May/FD050503.htm
- “Nancy Dorn: An alpha female in a field of alpha males,” The Washingtonian, http://www.washingtonian.com/articles/businesscareers/1670.html
- http://cramer.house.gov/HoR/AL06/Press+Room/Press+Releases/1999/11-22-99+Bachus,+Oth ers+Call+for+Continued+U.S.+Military+Presence+to+Protect+the+Panama+Canal.htm
- http://lists.state.gov/SCRIPTS/WA-USIAINFO.EXE?A2=ind0201b&L=us-china&D=1&am p;H=1&O=D&P=318
- http://www.pwchk.com/webmedia/doc/632908897880840336_m&abulletin_ap_mid2006_sg.p df