AFP uncovers suspected Chinese spy’s alleged plot to smuggle military equipment

Australian police have disrupted an alleged plot by two Queensland-based businessmen to traffic military hardware from Russia to China, a small part of what sources have revealed is a broader investigation into a suspected Chinese Communist Party spy network with ties to a relative of Chinese President Xi Jinping.

The Australian parliament was this week roiled by disputed allegations of Chinese influence, and on Friday the Queensland Magistrates Court heard that Chinese-born Gold Coast accountant Kim Bowei Lee, 64, and Russian-born Brisbane entrepreneur Alexander Cher, 63, had been charged with contraventions of Australia’s Defence Trade Control Act.

Alleged Chinese intelligence operative Brian Chen.

Multiple official sources, who are not authorised to speak publicly, say the charges had spun out of a broader ASIO investigation into an alleged Chinese spy network operating in Australia. Members of that alleged network were detected as early as August 2016 when Australian officials intercepted an unusual private jet flight, organised by an Australian casino, from the Gold Coast to New Zealand.

Mr Lee was one of six passengers on the flight. Among the others were president Xi’s cousin, Ming Chai, a Melbourne organised crime boss and casino junket operator Tom “Mr Chinatown” Zhou, and another figure suspected to be linked to Chinese intelligence.

The Magistrates Court in Brisbane heard on Friday that Mr Lee and Mr Cher were accused of partnering with another Chinese national and former Melbourne businessman Brian Chen, who is now in hiding overseas and subject of an Interpol red notice.

One official source, who has been briefed by ASIO, described Mr Chen as a Chinese military intelligence operative “who travels the world as a spy”. An ASIO informant claimed two years ago that Mr Chen had sought to plant an operative, Nick Zhao, a member of the Victorian Liberal Party, in a seat in Federal Parliament.

ASIO officers quizzed Mr Chen in March 2019 at Melbourne Airport but he was then allowed to depart Australia.

The charges Mr Lee and Mr Cher face are simply that they are accused of illegally brokering the supply of defence goods. There is no suggestion they are involved in espionage activity or any other criminality and the charges are yet to be tested in court.

Court documents allege that between January 9, 2018, and July 27, 2018, the two men “arranged for another person to supply goods which were listed in part 1 of the Defence and Strategic Goods list from the Russian Federation to the People’s Republic of China”.

Mr Cher, a Russian émigré who has run a string of companies in Queensland and NSW, was charged last week by detectives and released on bail after a short court appearance. He must not leave Australia and must report to authorities twice a week. When called for comment on Friday morning, Mr Cher said : “I can’t talk now. Call me later,” before hanging up.

According to business and property records, Mr Cher’s first venture in Australia was an agriculture company he founded in Bronte in 1996. In the late 1990s, he moved to Queensland, shortened his name from Alexander Tcherkezov to Alex Cher and launched a string of companies in the property, construction and maritime sector part-financed by businessmen from Russia and Ukraine. Mr Cher also worked as a federal government-licensed migration agent, running a business called Nita International that helped Russians get visas or residency in Australia.

Alexander Cher outside court on Friday.Credit: Cloe Read

According to court documents, Mr Lee was released last week on bail in connection to the alleged military equipment smuggling plot.

In a statement, the federal police confirmed that a “64-year-old Gold Coast man and a 63-year-old Brisbane man have been charged with arranging to supply [military] goods.”

The AFP statement didn’t name Mr Chen, but referred instead to an unnamed “59-year-old Chinese national, currently believed to be residing overseas” and who was the subject of an arrest warrant.

This masthead has confirmed that the case against the pair and Mr Chen grew out of a much broader probe by ASIO into Chinese intelligence operations and Chinese organised crime activities in Australia. That broader probe does not involve Mr Cher or Mr Lee.

Multiple federal and state sources with knowledge of the intelligence investigations said that by 2019, ASIO had begun mapping an overlapping and opaque network of Chinese Communist Party linked businessmen, money launderers and intelligence operatives.

Ming Chai was of particular interest to ASIO due to his family ties with the Chinese president and involvement with Chinese crime figures and Chinese Communist Party operatives in Melbourne. Mr Chai previously worked for a Chinese public security agency and telecommunications company ZTE, a firm with documented ties to the Chinese military-industrial complex.

The Australian Federal Police’s initial interest in the 2016 private jet flight was linked to allegations that Tom Zhou was a major money launderer, however subsequent ASIO investigations determined that at least two men on the flight (not Mr Chai) were linked to Chinese intelligence agencies. A key aim of such agencies is often to acquire defence materiel and secrets.

Mr Chen was not on the flight. He became the subject of intense ASIO interest in 2019. Prior to this, he was living in Melbourne and running several businesses. He was also listed as a director and shareholder in several Hong Kong and mainland Chinese companies with deep ties to the Chinese military procurement industry.

He was the first suspected Chinese intelligence operative to be unmasked in Australia and was named as part of an investigation by The Age, The Sydney Morning Herald and 60 Minutes in late 2019 and which aired allegations Mr Chen had sought to infiltrate Australia’s parliament. The reports detailed how an ASIO informant had claimed Mr Chen had sought to plant an operative in Federal Parliament via the Victorian Liberal Party member Nick Zhao.

In response to these revelations, ASIO director general Mike Burgess released a public statement saying his agency took the allegations involving a suspected interference plot “seriously.”

Mr Zhao died unexpectedly in March 2019, after telling ASIO officers that Mr Chen had allegedly offered him $1 million if he ran for a seat in Federal Parliament. There is no suggestion that Mr Chen was involved in Mr Zhao’s death, and the Victorian Coroner ruled the death did not involve foul play.

In an interview with this masthead in 2019, Mr Chen denied any links to Chinese military intelligence, insisting he was merely a businessman.

Analysis by officials of Mr Chen’s communications devices, travel and immigration records by authorities revealed he adopted multiple identities, including as a paint brush manufacturing manager, military vehicle manufacturer and Hong Kong journalist. Business records from Hong Kong and mainland China show Mr Chen also formed joint ventures with a subsidiary of Chinese military manufacturer Norinco.

Russian President Vladimir Putin and his Chinese counterpart Xi Jinping in Beijing before the opening ceremony for the Winter Olympics. Credit: AP

Mr Chen also tried to buy laboratory space at Australia’s science agency, the CSIRO, and he has connections to figures involved in China’s acquisition of an aircraft carrier from Ukraine. Among his collection of photos are pictures of him on Chinese naval vessels and, according to Mr Chen himself, meeting the Hong Kong businessman Xu Zengping who aligned with the Chinese military to acquire China’s first aircraft carrier from Ukraine.

The arms and defence technology trade in China has for years been controlled by the Chinese military, either via state-owned companies or ostensibly private firms controlled by defence officials. A similar dynamic exists in Russia, with estimates more than two thirds of the country’s arms trade is controlled by the state and is used as a tool of foreign policy.

More broadly, Russia has been forging far closer ties with China as the West has ramped up sanctions and other diplomatic pressure over Russia’s aggression towards Ukraine.

On February 4, Russian President Vladimir Putin travelled to Beijing for the Winter Olympics and engaged in significant discussions with Chinese president Xi.

While the international arms trade often is propelled by political or foreign policy agendas, it also can be a lucrative business pursued by those for economic gain.

In 2011, Australian and US agencies identified a plot involving Chinese intelligence officials who had sought the help of a Sydney crime figure to smuggle weapons to Iran and Lebanon. The suspected deal was organised in Sydney and Hong Kong and involved the supply of small arms by Chinese state-owned defence company Norinco, but lead to no charges.

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