Houston FBI warns of economic espionage after shutdown of Chinese consulate

HOUSTON – There is still no timetable as to when the United States may again allow China to resume operations at its now-shuttered consulate in the Montrose area. After four decades in operation, the US ordered the closure in July, claiming the consulate was the source of rampant spying.

“I would have to say the amount of information that we got out of that consulate is extraordinary,” said GOP Congressman Michael McCaul.

McCaul said despite video showing what appeared to be consular employees burning documents in the consulate’s courtyard, federal agents were able to obtain information pertaining to on-going investigations.

“I think you’re going to see a lot of prosecutions coming out of it because they weren’t able to destroy all the documents or hard drives,” said McCaul.

McCaul is the head of the recently created China Task Force, which is tasked with studying ways to combat potential threats from the Chinese government. The task force released its first report in September.

“What specifically are the Chinese targeting in terms of information from the United States?” asked KPRC2 Investigator Robert Arnold.

“They are targeting, I would say the Houston area particularly,” said McCaul.

McCaul said Houston is a target because of all the innovation coming out of NASA, the oil and gas industry, and the Texas Medical Center.

“Every time we lose a patent or we lose a technology and it goes back to China, we lose jobs,” said FBI supervisory special agent Don Lichay. “I don’t want our city and country to be at risk because we’re allowing intellectual property theft to happen.”

Lichay said one of the biggest threats is economic espionage. Many people connected to those targeted industries may be looking over their shoulders.

Lichay said the FBI actually now has offices in the Med Center, helping researchers safeguard their work and helping them spot a possible spy.

“We know that there’s a lot of federal funded dollars that go into the research there and we know that is an area that is definitely being targeted,” said Lichay.

Recent cases in our area involve a Texas A&M professor, Zhengdong Cheng, accused of secretly collaborating with the Chinese government while doing research at NASA.

Liberty county resident Robert Erford Jr. is also accused of selling trade secrets from the oilfield product company where he worked to a Chinese competitor. Court documents read Erford pleaded guilty and will be sentenced next year.

The FBI reports it’s opening a China-related counterintelligence case every 10 hours.

“Of the nearly 5,000 active FBI counterintelligence cases currently underway across the country, almost half are related to China,” FBI Director Christopher Wray said during a speech in July.

While the US government stated the closure of the Chinese consulate in Houston was necessary to protect America’s interests, it could have an impact on trade according to U-H Downtown professor and US/China relations expert Dr. Peter Li.

“I think it has done a lot of damage,” said Li. “It’s in the interest of both countries to have the consulate re-opened in the near future.”

Li said he understands the need to safeguard secrets, but argues closing the consulate punishes thousands of people who depended on its services for legitimate work and trade.

“These people are not spies and are making contributions, not just to the exchange of programs but also to the overall welfare of the two countries,” said Li.

About the Author:

Award winning investigative journalist who joined KPRC 2 in July 2000. Husband and father of the Master of Disaster and Chaos Gremlin. “I don’t drink coffee to wake up, I wake up to drink coffee.”