State Department Counterintelligence: Leaks, Spies, and Lies

by Robert David Booth

  The statement would have been laughable had the stakes not been so high. Keyser and his like-minded colleagues were the ones who were mired in fanciful diplo-talk. Obviously he still distrusted the department’s security apparatus. However, it was not a brave, new Russian world in any respect. As the OIG report was being written, the Kremlin was approving operational plans for the SVR to introduce clandestinely a listening device into the HST and FBI SSA Robert Hanssen, who would be convicted as an SVR penetration agent, was working on the first floor of the building at the same time. While the OIG’s Pollyannaish report erroneously waxed favorably about the new Russian society, the Kremlin’s intelligence services had not changed its behavior one iota.

  In the mid-1990s, the department was forced to remove whole floors from its new chancery under construction in Moscow because the building was infested from top to bottom with listening devices, at the cost of millions of dollars. What had led Keyser and team leader Richard H. Melton to conclude that productive features of the Cold War, such as security rules and regulations, were outmoded? The passing of the Cold War had not diminished the Russians’ appetite to target department personnel and American embassies in hopes of gaining access to sensitive information.

  Retired SVR Major General Oleg Kalugin, who had served under diplomatic cover as a second secretary and press attaché at the Russian embassy in Washington, DC, in 1965, summed things up much later when he wrote in his book The First Directorate that three of the principal targets of the SVR were the White House, the US Congress, and the State Department. Notwithstanding the OIGs fifteen-year-old report, I believe that Vladimir Putin has only quickened the pace of targeting department assets.

  Following his assignment in the OIG, Keyser served in 1998 as the State Department’s special negotiator in the Office of Special Negotiator for Nagorno-Karabakh and NIS (Newly Independent States), where he toiled away attempting to find peaceful solutions to selected conflicts in parts of the former Soviet Union.

  One year later, Keyser transferred to the State Department’s Bureau of Intelligence and Research (INR) with the title of deputy assistant secretary of state. INR was, and is, the department’s premier analytical component, with access to the most sensitive IC “top secret” technical and human information. Keyser was Kendall Myers’s senior supervisor in INR.

  During his tenure in INR, Keyser gained unwanted pubic notoriety when, in April 2000, it was reported in the press that DS and FBI special agents were investigating the circumstances surrounding the loss of an INR laptop computer containing “top secret” code word nuclear weapon proliferation information. The agents attempted to determine the circumstances behind its disappearance and the information contained in it from INR’s Office of Analysis for Strategic, Proliferation, and Military issues. The investigation uncovered a number of procedural and administrative lapses concerning the purchase and control of the missing computer; however, no individual was identified as being ultimately responsible for its disappearance. The computer was never recovered, and the investigation is still considered an active one despite the lack of leads. Given the public notoriety, sacrificial lambs had to be identified and punished. It turned out there would be only one sizable lamb slaughtered in the whole affair.

  Keyser, as the principal deputy assistant secretary of state for INR, was the senior operational officer in the office, and he was chosen as the designated fall guy for the loss. Following the department’s recommendation that Keyser be suspended without pay for thirty days, J. Stapleton Roy, one of the State Department’s most senior Black Dragons, former Ambassador to China, Singapore, and Indonesia, and Keyser’s boss in Beijing, resigned in protest. Keyser was eventually suspended without pay for one week in 2001 and shortly thereafter transferred to the position of deputy assistant secretary of state for East Asia and Pacific affairs (EAP).

  Obviously the penalty had no impact on his career—not that it should have since he was not responsible for the disappearance of the laptop. I agree with Ambassador Roy that Keyser was a scapegoat in this lamentable affair. As a result, though, Secretary Albright ordered a review of the department’s internal security practices and insisted that individual offices identify officers to be responsible for a revitalized security awareness program. In INR, the person who immediately volunteered and was accepted for the onerous duty was one Walter Kendall Myers—Agent “202” himself. Our Cuban spy had a quirky sense of humor if nothing else.

  Keyser and I would cross professional paths over the span of twenty-five years. All encounters were professionally and personally amicable. Don was a good guy in my book. In 2001, when I was the deputy director of counterintelligence and Keyser was the deputy assistant secretary of state for EAP, we were summoned by Assistant Secretary of State James Kelly to discuss a thorny counterintelligence issue concerning the personal “vulnerabilities” of FSOs who were candidates for assignment to countries whose intelligence services had been identified as being particularly aggressive in targeting American diplomats.

  My office was, by executive regulation, required to provide either a “yes” or “no” recommendation, on national security grounds, for department officers selected to serve in particularly hostile overseas counterintelligence environments. DS/CI would make a recommendation based on the potentially “disqualifying” information (read: “vulnerabilities”) contained in their SY Files. This policy, officially known as the “Pass-Through” program, had its official origins in a National Security Directive Decision (NSDD) signed by President Clinton in 1991. While our “no” recommendation hovered around the 2 percent level, it still caused numerous headaches for the department’s personnel office. Our recommendations were a problem in the view of some department staffers who did not understand how foreign intelligence officers target department officers.

  Keyser’s immediate supervisor, Assistant Secretary of State Kelly, had been persuaded by anonymous department officers that my office’s policy of reviewing and making “yes” or “no” recommendations to the director general of the Foreign Service was unfair, capricious, and arbitrary. From 1996 to 2000, the director general of the Foreign Service had upheld our “no” recommendations for proposed assignments 99.8 percent of the time, and that was causing administrative havoc for staffing EAP’s embassies. DS/CI was not perfect, but national security must trump any institution’s operational needs.

  At 2:30 p.m. on August 29, 2001, as I walked into room 4314A in the HST with my senior supervisor, William Armor, I noticed a beat-up wooden conference table in an otherwise nondescript and crowded room. It was likely to be the locus of my drawing and quartering. Professional colleagues Chris LaFleur, a Tokyo colleague from the 1978–80 era, Max Bare, and, to my complete surprise, Keyser, were present. Upon seeing Keyser, my poker face relaxed a bit.

  “Nî hâo, Robert,” Keyser said, saluting me in Mandarin. “It’s been some time. How are you doing?”

  It is hard not to like Don Keyser. He stuck out his hand, and we shook. Dressed in a three-piece conservative suit, white shirt, and striped tie, he had sparse hair that was now almost completely white.

  “How are John, David, and Evan doing?” he asked, inquiring about my fellow Beijing security officers.

  “Luckily they’ve all managed to survive and prosper after our posting to Beijing, and all remain with the department. Of course, of our Beijing colleagues, none has done better than George Bush, no?”

  “From ambassador to director of the CIA to vice president to president. Brilliant.”

  “You know,” I said, “we still stay in touch by mail, and when Barbara and George visited Paris in 1994, I was able to arrange for a private little sit-down with my wife and me because Barbara wanted to see my four-year-old daughter, Chloe. George looked relaxed and appeared to be enjoying himself. I even have a photo of the event.”

  Keyser started to laugh. “George and Barbara had a fondness for you four security guys.”

  “And I see you’ve done quite well with yours
elf in a short period of time.”

  He put his hand on my shoulder. “One never knows in this business. Now let’s sit down and get this pow-wow underway.”

  The meeting was convened so the participants could better understand how the “Pass-Through” program worked. Armor was happy to let me represent DS’s position during the meeting, and I was ecstatic for the opportunity to explain the nuances of the NSDD as interpreted by the State Department. The discussions were generally cordial but sometimes a bit pointed in my direction. By the meeting’s conclusion, Keyser and an officer from the Bureau of Human Resources, the two original disbelievers, had apparently been convinced that the program was both transparent and fair. In the end, Keyser asked Assistant Secretary Kelly to give DS the opportunity to explain the Pass-Through program to younger department employees so as to dispel any rumors that DS was running an out-of-control Star Chamber detrimental to their careers. He did, and we did. I am pleased to report the program continues today.

  Subsequently Keyser was appointed as the principal deputy assistant secretary of state (PDAS) for EAP, where he was responsible for monitoring, among many challenging issues, major diplomatic and political topics affecting the Beijing-Taiwan–Washington, DC, dynamic.

  In his new position, Keyser would be introduced to Chen Nien-tsu, a “junior officer” assigned to the administrative section of the quasi-diplomatic entity of Taiwan operating inside the United States known as the Taipei Economic and Cultural Representative Office (TECRO), located in northwest Washington, DC.

  In reality, Chen Nien-tsu, also known as Isabelle Cheng, was a clandestine intelligence officer working for the Taiwanese National Security Bureau (NSB), a foreign intelligence agency. After meeting her, Keyser’s future would be forever changed.

  Chapter Six

  Established in March 1955 and subordinate to Taiwan’s National Security Council, the NSB is responsible for collecting and analyzing all intelligence affecting Taiwan’s national and strategic interests. Isabelle Cheng was thirty-three years old, a graduate with honors in political science from National Taiwan University. She had worked for Taiwanese legislator Chen Chien-jen before working for the NSB, and he was the current TECRO chief.

  When she arrived in Washington, DC, Isabelle Cheng was engaged to correspondent Chris Cockle, a correspondent for the China Post in Taiwan who was transferring to Washington. They would marry in July 2004. Cheng’s assignment was simply a matter of a Taiwanese clandestine intelligence officer working inside one of its diplomatic missions. By itself, it was pretty much humdrum stuff.

  Shorn of all subtleties and eyewash, TECRO employees were nothing more than a bunch of super lobbyists for the Republic of China or the so-called government of Taiwan or, as the department preferred, simply Taiwan. When President Jimmy Carter assumed office in 1977, he discovered that he had inherited a President Ford/Secretary of State Kissinger diplomatic mess whereby Washington and Beijing maintained quasi-diplomatic liaison offices in each other’s capitals while Taiwan and the United States conducted formal relations through their respective embassies. President Carter wanted to end the political charade and formally switch diplomatic recognition from Taipei to Beijing, but others in government circles, including the powerful Taiwanese lobby, insisted that whatever formula the new administration devised could not be achieved at the expense of severing commercial and political ties with Taiwan.

  After two years of quiet negotiations between Washington and Beijing, President Carter agreed to “derecognize” Taiwan and accept Beijing as the sole and legitimate government of the Chinese people. Undeterred by President Carter’s behind the scenes maneuvering, the Taiwan lobby, heavily supported by Senator Barry Goldwater, was able to convince Congress to pass the Taiwan Relations Act, allowing the United States to continue official business with Taiwan despite formal recognition of the People’s Republic of China. Deng Xiaoping, Mao Tse-tung’s successor and paramount leader by 1979, was pragmatic enough to accept Washington’s special relationship with Taiwan and continue the normalization of relations with the United States.

  As a result, the American embassy in Taiwan was decommissioned as was the Taiwan embassy in Washington, DC, and they were replaced by the American Institute in Taiwan (AIT) and TECRO, respectively. State Department officials were authorized to meet with Taiwanese representatives as long as the functions occurred off official US premises. Reaching out to all private and public institutions in the United States, TECRO officials attempted to gain the moral and political high ground for their government in Taiwan.

  Covert NSB officers working under TECRO cover conduct business in Washington the same way their diplomatic colleagues in the SVR, DGSE, Mossad, MSS, and other foreign intelligence services operate in our nation’s capital. State Department officers and their foreign embassy counterparts interact by exchanging views on a variety of matters, including strategic and counterterrorism objectives with our allies and, yes, our adversaries. Department officers with oversight for Asian issues meet and develop professional relationships with foreign diplomats and citizenry knowledgeable of that region of the world. Keyser, as EAP PDAS, would have been a prime target for any Asian diplomat assigned to Washington.

  As a matter of practice, the FBI conducts surveillance on foreign diplomats accredited by the State Department assigned within the United States who are suspected to be clandestine intelligence officers. At TECRO, Lieutenant General Huang Kuang-hsun, known to his friends as Michael Huang, was the senior NSB officer residing in the United States. His official Taiwanese title, rank, and position within the NSB had been declared to the US government in the same fashion that the senior CIA chief of station’s identity is disclosed to senior foreign host government officials. This practical expediency allowed senior US intelligence officers to meet overtly, yet discreetly, with their opposite numbers to resolve various intelligence issues affecting both countries. It was all done on the QT. All other intelligence officers remained clandestine unless liaison circumstances required otherwise. Knowing that Michael Huang was an NSB official, the FBI monitored which TECRO officers would be seen most frequently in his company at social settings or official gatherings outside its official compound. Clearly any newly arriving junior officer assigned to TECRO who associated with General Huang might provide a clue to the officer’s true mission. Cheng, who arrived in Washington in 2001 as the newest addition to the TECRO staff, quickly met the FBI’s hostile intelligence profile.

  What exactly aroused the FBI’s suspicion of Cheng? In midsummer 2001, Michael Huang was recorded by FBI surveillance as being fully engaged in his social and semiofficial engagements throughout metropolitan Washington and increasingly accompanied by Cheng. The obvious FBI conclusion was that the senior officer, General Huang, was mentoring his junior subordinate.

  In May 2002, Keyser was at a department-sanctioned meeting at the Four Seasons hotel with seven TECRO officials. General Huang and IC officials were also present. Cheng was the official note-taker during the discussions. It was apparent to all in the room that the young officer was Huang’s newest protégé. Reportedly Keyser and Cheng did not engage in any discussion during the meeting, nor did they exchange business cards. While this initial meeting did not result in a promise of continuing contact, they were reunited at a subsequent dinner some five months later.

  In the fall of 2002, AIT director Gregg Mann hosted a private dinner at his home for TECRO officials, including General Huang and Cheng, certain department officials, and select US and Taiwanese businessmen. According to the attendees, sometime during the soirée Keyser and Cheng moved to Mann’s kitchen while the rest of the guests played out a familiar diplomatic waltz in the living and dining rooms. Removed from the general hubbub, the pair spent the next two hours in quiet conversation. Before the evening ended, Cheng and Keyser exchanged office numbers and e-mail addresses.

  The next day, Cheng called Keyser at the State Department and suggested that the two rendezvous for a luncheon the following we
ek. Her invitation was immediately accepted. Was the hook baited, and had the prize struck?

  Within weeks, Keyser and Cheng were in frequent telephone and e-mail communication, interspaced with midday restaurant meetings in suburban Virginia and Maryland. Occasionally the twosome’s rendezvous would include General Huang. The NSB general must have been very pleased with his young colleague’s diplomatic success.

  In late 2002, after several weeks of monitoring Keyser’s meetings with the suspected NSB officer, the FBI quietly approached DS/CI to express its concerns. DS/CI explained to the startled FBI agents that department officers routinely are permitted to meet with foreign diplomats and citizens, including possible intelligence officers, as long as they report their contacts in accordance with department regulations. A department officer simply cannot conduct his or her job effectively without such contacts. The DS/CI deputy chief pointed out that there was no specific DS prohibition against meeting most foreign diplomats without prior authorization from the department. The department’s HR office required FSOs to report social relationships, including marriage proposals, with foreign nationals.

  The DS/CI deputy chief advised the FBI agents that FSOs have to report contacts to DS per 12 FAM 262 only if a contact (1) asks for classified information, (2) asks the officer to become a spy, or (3) is a citizen of a country designated as being particularly hostile to the US national interests. In these circumstances, the State Department officers also know that, according to internal regulations, there exists a general disclaimer: “The non-reporting of a relationship under this section will not constitute a security violation or result in disciplinary actions, as self-determination is the intent of the criterion.” Even more wishy-washy, the foreign affairs manual states that “a security clearance will not be suspended solely because the employee did not report a relationship under this criterion.”