Cliff Burns at ExportLaw Blog recounts the tale of Chinese operatives, who'd set up a front company to buy export-controlled items, ensnared by American operatives who'd set up a front company to catch front companies doing precisely that.
Front companies of foreign intelligence services are most likely a dime a dozen, but it is rare when they are discovered, no less made public and prosecuted publicly. During the mid-1980s, I was working in Osaka for a Japanese electronics company. A friend of a friend (both Chinese resident in Japan) approached me looking to appoint me U.S. representative of his company, the Japanese subsidiary of Sea Gull Co. (Hai Ou 海鷗).
Specifically, I was asked to find and conclude deals with American manufacturers of gluing machinery, which applies glue between the fibers and the base cloth of oversized carpeting. This seemed like a delightful opportunity. I'd visited carpet factories in Tianjin -- while selling electronic components to Chinese factories for another Japanese company in Tokyo, sort of a solo jaunt, shall we say, during which I searched and did not find product worth exporting to the U.S. -- so I knew the machinery was needed.
Through friends, I discovered Sea Gull's connection to Chinese naval intelligence. While I thought it possible that a unit of naval intelligence was indeed looking to go into the carpet business, the mere possibility of my being used as a front swore me off the deal really fast. With friends like these...
On the subject of spies, I recommend two books -- lots of fun reading.
我杀死了张作霖 -- the record of a Japanese spy who in September of 1931 helped plan the murder of warlord, Chang Tso-lin (available in digital form in Chinese; originally published in Japanese)
Vespa, Amleto, Secret Agent for Japan. Wikipedia entry here.
