(Reuters) – A Chinese state-security official arrested this year on allegations of spying for Washington is suspected to have compromised some of China’s U.S. agents in a major setback that angered President Hu Jintao, sources said.
Hu personally intervened this year, ordering an investigation into the case after the Ministry of State Security arrested one of its own officials for passing information to the Americans, two sources with direct knowledge of the matter said.
The official, an aide to a vice minister, was taken into custody sometime between January and March after the ministry became alarmed last year over repeated incidents of Chinese agents being compromised in the United States, they said.
The ministry’s own investigations found the aide had been working for the Central Intelligence Agency (CIA) for years, divulging information about China’s overseas spy network in the nation’s worst espionage scandal for two decades, they added.
The sources’ comments represent the first confirmation that overseas Chinese espionage was deemed to have been damaged by the security breach, which has been kept quiet by both Beijing and Washington. Reuters first reported it on June 1.
The aide’s identity has still not been revealed but he worked for vice minister Lu Zhongwei, the sources said, speaking anonymously due to the sensitivity of the case.
They declined to elaborate on the information he is said to have passed to the Americans or how it compromised China’s agents, but they have said it involved “political, economic and strategic intelligence”.
Despite the breach, Lu has been spared formal punishment, the sources added, confirming for the first time that the vice minister had been cleared of working for the Americans after the wider investigation ordered by President Hu.
Instead, Beijing found that Lu had failed to properly screen the aide before hiring him. It stopped short of disciplining the vice minister, anxious to put the scandal to rest after several other political and diplomatic embarrassments this year.
“Lu Zhongwei’s problem was he used a person without (adequately) investigating first,” one source said, adding “The central government does not want to create trouble in a politically sensitive year.”
China’s ruling Communist Party plans a once-a-decade leadership transition late this year and is keen to wrap it up without further trouble. The normally well choreographed process has already been marred by a murder scandal which claimed the career of Bo Xilai, a contender for the new leadership team.
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