http://sunday.ninemsn.com.au/sunday/cover_stories/article_2077.asp
Chinese whispers and the Aussie killing machine
October 1, 2006
Reporter :Sarah Ferguson
Producer : Nick Farrow
The Chinese military is on a campaign to acquire Australia's military secrets. There are massive implications if the information gets out.
A special investigation by Sunday reveals that representatives of the People's Liberation Army of China have made at least four separate attempts to acquire secret, high-tech weaponry.
"Metal Storm" is the name given to a deadly weapon being developed by a Brisbane based company. The weapon has been identified by the US Department of Defence as a technology so deadly that it must not be allowed to get into the hands of America's enemies.
In one instance, a Chinese-Australian man on a trip to China was approached by a powerful bureaucrat with a secret proposition. The Chinese army needed someone to help them get their hands on "Metal Storm" weapons technology. Money was no object and a multi-million-dollar commission was the reward.
In another audacious approach to acquire the weapon, there was an attempt to lure the inventor of the technology to Beijing in return for a huge cash payment: "They said we don't want metal storm weapons, we don't want the paper work, we want you in Beijing."
The Chinese were so persistent that the Brisbane man feared for his safety and contacted the Defence Department's security service for protection: "What I was expected to do in Beijing was to divulge all the knowledge I had to enable prototypes to be built for the weapons system to be developed."
Unlike the United States, this method of acquiring secrets doesn't break any laws in Australia: "What I was expected to do in Beijing was to divulge all the knowledge I had to enable prototypes to be built, for the weapons system to be developed."
Sunday has the inside story of Chinese attempts to get hold of the most potent weapon under development, anywhere in the world.
TRANSCRIPT
SARAH FERGUSON: Early last year this man was approached by a powerful Chinese bureaucrat with a secret propositionÂ… a deal which, he was told, would net him millions of dollars. The Chinese army needed an Australian businessman to help them get their hands on the deadliest military technology ever invented in this country. The revolutionary weapon system's known as Metal Storm.
JUN YANG: Min Qiang say it's very important that you don't talking other person, and this one, the Chinese army very interested with this one, want to buy this one buy this technology and buy this gun.
SARAH FERGUSON: Until now Jun Yang has kept quiet about the proposition and the role the Chinese wanted him to play. When you return to Australia, we want you to purchase it for us, if you can't get the gun, get the technology. He was afraid of repercussions. But now he's decided to tell the storyÂ… to alert Australia to the threat.
IAN GILLESPIE: After a bit more questioning it became clear the product, if she'd able to buy it, would have ended up in the hands of the Chinese military
BATES GILL: The Chinese are in the midst of a pretty important military build up. CUT In some cases it has taken Western intelligence agencies by surprise.
MIKE O'DWYER: I think the vulnerability for small Australian defence industries is high.
SARAH FERGUSON: The inventor of metal storm Mike O Dwyer says that the Chinese military have been pursuing the technology for almost 10 years. Do you think the australian govt takes it seriously enough?
MIKE O'DWYER: I think it's very unlikely the Australian government has understood the significant persistence and determination of this effort.
SARAH FERGUSON: O'Dwyer's concerns are shared by the US government which has classified Metal Storm as a technology which must not fall into the hands of America's enemiesÂ…
SARAH FERGUSON: But what about the Australian Government? What has it done to protect Metal Storm, a technology it invested more than ten million dollars in developing? The answers are not encouraging. When we approached the embattled Defence Minister Brendon Nelson we were told he had only a "lukewarm" interest in the subject Â… and referred our inquiries instead to the Department of Trade.
MIKE O'DWYER: It can unleash all those projectiles in such a short time that you will only hear one bang so it takes you into a realm that is beyond the capability of your eyes and ears to grasp.
SARAH FERGUSON: Metal Storm is so revolutionary it could potentially give any military force a profound advantage in firepowerÂ…
MIKE O'DWYER: Some of this firepower is so great I have had Generals say to me, look, if we knew we were facing metal storm (pods) in a particular configuration we simply would make the decision that we can't go there it would be suicide.
SARAH FERGUSON: In a Metal Storm weapon, bullets or warheads are lined up inside the barrel. Still in prototype, the technology can be applied to almost any calibre of weapon
IAN GILLESPIE: Because of the way we fire the projectiles which is by electronic operation instead of mechanical we can fire at very high rates of fire. We have fired the gun at over one million rounds per minute.
SARAH FERGUSON: Over a decade the Australian government has invested more than $10 million and substantial expertise into developing the technology. O'Dwyer is frustrated though that they have not moved faster to get Metal Storm into combat.
MIKE O'DWYER: It is vitally import that the western democracies take advantage of that if you will in the sense of keeping ahead of any potential adversaries.
SARAH FERGUSON: It's a point well understood in the US. Analyst Bates Gill is funded by the American government to study the build up of the Chinese military.
BATES GILL: It's of particular concern to countries such as Japan, Australia and South Korea and other American allies because there may well be a situation down the road where we find ourselves in a confrontation with China and where these technologies might end up being used against us.
SARAH FERGUSON: The headquarters of Metal Storm are in this tower building in Brisbane Â… in an office with an unusual level of security
IAN GILLESPIE: Our building is secure we've got more than the normal amount of security to ensure we know who is coming and going. And where our key information is sorted and protected.
SARAH FERGUSON: Metal Storm executive Â… he knows there are people both inside and Australia and overseas who would like to copy or steal the technology.
IAN GILLESPIE: We take a number of steps to protect our technology including patents keeping a lot of our information secret ensuring our work is done in secure environments.
SARAH FERGUSON: In the United States, the defence department has spent more than $20 million on Metal Storm. The US government has enacted very strict controls to protect its military technology Â… partly in response to China's aggressive military build up Â…
BATES GILL: Within the US government Id say the Pentagon is probably the most concerned and it is the furthest out in front of US efforts to try and restrict potential transfers of sensitive technologies to China.
SARAH FERGUSON: In 2004 the Pentagon reviewed the entire war fighting capability of the US military. From the multi-billion US defence industry, the Pentagon drew up a list of the key military technologies.
SARAH FERGUSON: Number eight and the only Australian technology on the list Â… is Metal Storm. The report also puts metal storm on a watch list of technologies that specifically must not be acquired by the enemies of the US. Jun Yang had never heard of Metal Storm until Min Qiang the Chinese bureaucrat made his offerÂ…
JUN YANG: He said Mr Yang we have a proposition for you. The Chinese liberation army wants to buy Metal Storm. It's very advanced technology. When you return to Australia we want you to purchase it for us.
SARAH FERGUSON: Jun was an unlikely recruit to become a Chinese agent of influence. In the early 1990s he was a prominent figure in the Chinese community in Australia Â… heading a students' association here in the aftermath of Tiananmen Square Â… a time when Australia had briefly enforced an arms embargo against China. By 2005 when Jun was on an extended business trip to China, that embargo was long over. While staying in Beijing, an old friend invited him to lunch.
JUN YANG: He's very powerful person in China his father too.
SARAH FERGUSON: What was the deal he was proposing?
JUN YANG: This business we are just take the commission, the army gave me money, no my money Min Qaing say. This is Chinese army, the money.
SARAH FERGUSON: He told you the money was being supplied by the Chinese army?
JUN YANG: Yes. Yes.
SARAH FERGUSON: Min Qiang is the Deputy General Manager of FESCO Â… a sort of human resources organisation opened in the 1970's for foreigners wanting to do business in ChinaÂ… intelligence sources say it was routinely used as a means of spying on foreigners. Through a translator we rang the FESCO office in Beijing and asked to speak to him. At that point Min was cooperative.
TRANSLATOR: Is that Min Qiang?
MIN QIANG: Yes.
SARAH FERGUSON: Did you ask him to purchase the Australian weapons technology Metal Storm?
SARAH FERGUSON: Min didn't deny having known Jun but said that he didn't think about Jun any moreÂ…
SARAH FERGUSON: Can I ask you this? Hello? Min Qiang refused to respond to any further phone calls. Min Qiang knew that Jun was in need of money ... the deal Min was proposing was a lucrative one.
JUN YANG: Your other businesses aren't successful. But I'm sure you'll make money out of this quickly. Go back to Australia and find it. If the purchase is a success your commission will be transferred to your back account.
SARAH FERGUSON: Did you want to make money?
JUN YANG: Yes, of course.
SARAH FERGUSON: How concerned are you to restrict the technology to Australia and its allies?
IAN GILLESPIE: Very careful. At the moment we're only working with the Australian government and the US Government and to some extent our partners in Singapore and here in Australia.
SARAH FERGUSON: Min Qiang warned Jun they were in competition with other Chinese officials to secure the Metal Storm deal.
JUN YANG: Min Qiang told me that there were others engaged in this business, two officials stationed in Canberra part of the military's 'Number Three Section' involved in the acquisition of weapons.
SARAH FERGUSON: At a follow up meeting in Beijing, Min Qiang gave Jun a simple brochure with Metal Storm's contact details Â…
JUN YANG: Min Qiang give me this one, this Metal Storm this Chinese oneÂ…
JUN YANG: My wife's English is better. He wanted me to ask her to contact them when we went back to Australia.
SARAH FERGUSON: Did you think that what you were proposing was against Australia's interests?
JUN YANG: No I think, no, I'm not think.
JANE WU: My husband pushed me to call, I bring out the brochure and I call themÂ…
IAN GILLESPIE: The call came through. She said she was from some obscure organisation that had no defence connection.
JANE WU: I said 'Is it possible to buy the products?'
SARAH FERGUSON: Did he ask who you were and who you represented?
JANE WU: He asked but I didn't talk too much about this to him.
IAN GILLESPIE: I gave her the answer that the systems weren't available for sale they weren't developed to the stage that they could be but in any case I would need to know more.
SARAH FERGUSON: Did she say exactly who she was doing business for?
IAN GILLESPIE: After a bit more questioning it became clear the product, if she'd able to buy it, would have ended up in the hands of the Chinese military.
SARAH FERGUSON: It wasn't the first approach from China but Ian Gillespie doesn't want to give too much awayÂ…
IAN GILLESPIE: There was one from somebody saying they represented a delegation that was in town and wanted to come round and look at the factory and see the technology and visit the factory and so on. Again another individual He was a foreign national of Chinese extraction.
SARAH FERGUSON: Do you remember who he asked for?
IAN GILLESPIE: How would one go about acquiring product and I said who for and what for and ultimately it became clear it was "interests in China" and I gave him the same answer pretty well I gave the lady.
SARAH FERGUSON: Which is?
IAN GILLESPIE: It's not available for a start. And if it was there'd be real problems for us supplying to somebody like that.
MIKE O'DWYER: It's interesting to see that the enthusiasm for the product in China isn't matched by the Government here in Australia.
SARAH FERGUSON: There are regulations that prevent Australian defence firms from exporting defence technology and intellectual property to China. But unlike the United States there are no laws here to stop the Chinese from importing the inventor himself — along with his secrets and expertise. And that's exactly what the Chinese tried to do with Mike O'Dwyer. The approach began with a phone call from overseas, when he was working at the metal storm office in Washington DC.
MIKE O'DWYER: It was a defence related enquiry from a man with strong American accent so I just accepted it as a normal conversation.
SARAH FERGUSON: The man's next request was anything but normal.
MIKE O'DWYER: The gentleman spoke to me in very straight talk and short sentences and basically said look I'm not going to beat about the bush, he used those words, I'm sitting at a table in Beijing and all the people in the room with me are representatives of the People's Liberation Army and why we are making this phone call is that we want metal storm technology.
SARAH FERGUSON: Did you believe him?
MIKE O'DWYER: I was very unsure about believing him save that his identity was confirmed by a defence associated person that I knew in DC.
SARAH FERGUSON: For security reasons O'Dwyer doesn't want to reveal the man's nameÂ…
MIKE O'DWYER: He said we don't need any Metal Storm weapons, we don't need any of the paper work, the history — what we want is you we want you and your family in Beijing.
SARAH FERGUSON: They offered a huge cash incentive.
MIKE O'DWYER: The money that they were talking in terms of was around $US50 million when I arrive and 50 million US, 12 months later.
MIKE O'DWYER: What I was expected to do in Beijing simply was as I understood it to work with a group of people to divulge all the knowledge I possessed regarding Metal Storm to enable prototypes to be built for the weapons systems to be developed.
SARAH FERGUSON: Did you consider accepting the offer?
MIKE O'DWYER: Not only did I not accept but I felt the need of concern to report the matter to Australian Government agencies to seek advice on how to handle the situation.
SARAH FERGUSON: O'Dwyer contacted the Defence Security Authority Â… who are responsible for all defence related security matters Â…
MIKE O'DWYER: The response of the Australian government was to provide me with advice on how I should continue the discussions and some advice about personal safety and that's all I can say on the matter.
SARAH FERGUSON: O'Dwyer kept taking the phone calls.
MIKE O'DWYER: In all they said they were interested in those applications that had massive fire power capability.
SARAH FERGUSON: The phone calls ceased when O'Dwyer moved back to Australia Â… but the contact from China didn't.
MIKE O'DWYER: I started to receive emails from companies in China enquiring, apparently separately, of their interest in the technology. And I responded to none but kept them on file and over a period of the next six to eight months I got as many as five or six that type of number.
SARAH FERGUSON: O'Dwyer collected the emails together and sent them to the Defence Security Branch.
MIKE O'DWYER: It was confirmed to me that they were traced back to the same source. Now the source to me was not identified but they all came from the same source. It was certainly enough for me to say 'I'm not having any dealings here.'
SARAH FERGUSON: Does that mean these companies were front companies?
My clear belief that these were front companies acting on behalf of others. Jun Yan and his wife Jane eventually abandoned their pursuit of Metal Storm Â… when they became practitioners of Falun Gong Â… the Chinese spiritual movement whose practitioners are routinely persecuted by the Chinese Government.
JUN YANG: I now think it's better to be a Falun Gong practitioner than to make money.
I talked it over with my wife and we decided not to carry on with this weapons business.
Now matter how much we'd make, we wouldn't do it.
JANE WU: I don't make too many decisions in my life .I think this is the biggest one. And the very strongest one. I just have the sense of that. I talked to my husband, we should stop.
SARAH FERGUSON: The decision to stop and now to expose the deal carries risks for all involved.
JUN YANG: Yes I think there should be, should be we got some danger.
SARAH FERGUSON: Does that mean you will never go back to China?
JANE WU: Yes.
SARAH FERGUSON: Jun Yang may now have decided not to do China's bidding Â… but his is just the latest in a series of attempts by the People Liberation Army to acquire Australia's military secretsÂ…
MIKE O'DWYER: They've gone on for a long period of time, coming at the company from all sorts of quarters, surely its vital for the Australian government to take them for what they are they're serious.
SARAH FERGUSON: Metal Storm's Mike O'Dwyer warns the Chinese are confident they will succeedÂ…
MIKE O'DWYER: You could certainly sense a total resolve on his part, a total understanding looking through his eyes that sooner or later he was going to succeed.
SARAH FERGUSON: That is the PLA would get Metal Storm?
MIKE O'DWYER: Yes.
