The Sixth Bureau Episode 3: Suck, Squeeze, Burn, Blow

0:28The news doesn't stop on the weekends. We put the past week's events into context, examining what happened in the markets and the world. Then on Sundays, we speak with journalists, columnists, and key political figures to prepare you for the week ahead. Join us as soon as you wake up and bring us with you wherever your weekend plans take you. Watch us on Bloomberg Television, listen on Bloomberg Radio, stream the show live on the Bloomberg Business app, or listen to the podcast. That's Bloomberg this weekend, Saturdays and Sundays starting at 7 a.m. Eastern on February 28th. Make us part of your weekend routine on Bloomberg Television, radio, and wherever you get your podcasts.

1:28It makes for some pretty entertaining episodes. Listen to Legally Brunette on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. A couple quick notes before we get started. Throughout the rest of the series, you'll hear people refer to GE. They're usually talking about a division of the General Electric Company that made aircraft engines, GE Aviation. Today, it's an independent company called GE Aerospace. So you'll hear people use all these terms, and they basically mean the same thing. Also, this is the third episode of this series. If you missed the first two, we recommend going back and listening in order.

2:04Thanks.

2:10Do you know what that is?

2:15It's loud. It's definitely loud. Drake, you want to talk about where we are and what we're seeing? We're at the Paris Air Show, and that noise in the background is some kind of advanced fighter jet doing loops above us in the sky all around us. Wow.

2:40The Paris Airshow takes place every two years. It's been happening since 1909, almost as long as airplanes have existed. It's held at Le Bourget Airport, which is actually where Charles Lindbergh landed after his famous flight across the Atlantic in 1927. A century later, this airport still gets to be, for a week, the center of the aviation world. This is the greatest repository of knowledge about the industry you're going to find on a global basis. This is Richard Abolafia, a consultant in the aviation industry. And who are some of the biggest companies here? The charismatic megafauna are the airframers.

3:18So you've got Boeing, Airbus, Lockheed Martin, folks like that. And then you've got the engine ecosystem led by General Electric and, well, dozens and hundreds, thousands even, of companies going down to the second, third and fourth tier of the supply chain. People are here to network and to show off. There are all these huge exhibition halls full of booths displaying products like control systems, landing gear, radar transponders. Outside, aircraft are lined up along the taxiway, shining in the bright sun in all their glory. There's all sorts of eye candy here, in all directions. But we spent the majority of our time looking at one thing.

3:57The GE9X aircraft engine, it's the most powerful commercial jet engine that's ever been made. The GE9X, made by GE Aerospace, is outside on its own little stage with its own security guards and a velvet rope. First, it's huge. It's gigantic. I mean, at its widest, the sort of intake fan blade section is almost 12 feet in diameter. So you can see inside it, and it looks really complicated. I, even having done the reporting we've done, like, can't make much sense of what I'm looking at, honestly. But if you did have a little bit more of technical proficiency, like you get this... Like Richard, who definitely has a little more technical proficiency than we do.

4:45And he says jet propulsion is actually pretty straightforward. It boils down to four words. Suck, squeeze, burn, blow. Suck, squeeze, burn, blow. You're sucking air in, you're squeezing it, you're compressing it in several stages of a compressor. Burn, of course, is the combustor. That's an engine, just like a car engine. It's burning fuel. And then blow, of course, is what comes out the back that gives you your propulsion. Simple. And yet, really hard to perfect. Because making an engine is one thing. Making it light enough and powerful enough to fly through the air is another. Making money on it is another.

5:25And having everyone land safely at the end of the day, every single time, is still another. The stakes are incredibly high. So being able to make engines like this puts GE into a very exclusive club. There are only three companies and two countries in the entire world that can build a decent commercial jet engine. General Electric and Pratt & Whitney of the U.S. and Rolls-Royce in Britain. None of those companies, you'll notice, are Chinese. There are all sorts of areas where Chinese companies have caught up with and surpassed their Western competitors. Today, a smartphone made by China's Huawei is just as advanced as an iPhone.

6:05And a BYD electric car is on par with a Tesla, and a fraction of the price. But when it comes to commercial aviation and commercial jet engines, no dice. Obviously, the Chinese government wants to change that. They claim that their latest fighter jets already rival America's. And China's state-owned airplane maker, Comac, is currently making commercial planes meant to compete with Airbus and Boeing. But Chinese passenger jets are still heavily reliant on tech from Western companies. Which makes the Paris Airshow a very compelling destination for a certain type of government employee.

6:40What about spies? So spies come here? There's no question. There's no question, you know. Re-enter Shu Yanjun. Shu was here back in 2017. But of course, to get to the Paris Airshow, he and his colleagues had to take precautions. They used a front company to get their visas, and they didn't fly directly to France. June 17th, early morning flew to Athens. They flew into Athens? FBI Special Agent Bradley Hull. They went to Santorini, where they rented a villa. June 18th, took ferry to Santorini. We have photos of the villa and the view from the villa. It was stunning. We also have photos of them in the hot tub with what appear to be narcotics.

7:26We also have photos of them with women, some in the hot tub, some in other locales. So basically, it looked like these five or six MSS officers who were on this trip were a bunch of lads out on the lash, to use the British term for it, right? They were there to party. So that if anybody was watching them, they wouldn't look like a group of MSS officers there to do spycraft. They look like a bunch of guys doing a big European trip where, you know, you drink, you carouse, et cetera. The lads out on the lash, as Bradley would say, partied their way through Venice, Verona, Florence, Rome. And ultimately, after five days of what we call a surveillance detection route.

8:08The team determined they were clean. They bought tickets for cash at the airport. June 22nd, flew to Paris. And went straight to the Paris Air Show. We could see which gate they entered. We know they spent a lot of time around an area where one of the U.S. Predator drones was set up. We have a couple images of that. They had at least two meetings with other individuals, either at the Paris Air Show or around the Paris Air Show. And that's what they were there to do, ultimately. They were there to mix and mingle, and it certainly seems like they did. On top of all that, Chu had another job to do.

8:41He had to go shopping. For his boss... One briefcase, two Lacoste t-shirts. For his boss's boss, or his boss's boss's wife... One Miu Miu purse, one Zanga belt, one Embo bracelet. And for the big boss, Chu really splashed out. Two bottles of Latour, one Zanga clutch, one box of macaron. wrong. He spends thousands of euros. And yet, when he gets home, it's clear his gifts don't get the reaction he was hoping for. Went to work, gave on all the gifts, didn't buy enough. It was a small enough thing, but it bugged him. And it was one of a growing number of indignities he suffered in 2017. The year marks a kind of inflection point for Shoe.

9:29He begins to struggle at work and also at home. But that same year, he would get introduced to a new source, the kind of source that could change everything.

9:45This was going to be the highlight of Hugh's career. This is going to be the recruitment that is going to set him aside from all of his peers. This is big. This is a very big thing. From Bloomberg News and iHeart Podcast, this is The Sixth Bureau. I'm Jordan Robertson. And I'm Drake Bennett.

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10:54That's vanguard.com slash audio. All investing is subject to risk, Vanguard Marketing Corporation Distributor. Hello, I'm Stephen Carroll. I'm in Brussels, where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London. We're the hosts of the Bloomberg Daybreak Europe podcast. We're up early every weekday, keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled, and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now.

11:28And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break. So whether it's geopolitics, energy, tech or markets, you're hearing it while it happens. It's smart, calm and to the point And it fits into your morning You can find new episodes of the Bloomberg Daybreak Europe podcast by 7am in Dublin or 8am in Brussels, Berlin and Paris On Apple, Spotify, YouTube or wherever you get your podcasts Hey everyone, it's Emily Simpson and Shane Simpson from the Legally Brunette podcast Each week we're bringing you true crime through a legal lens Whether you want all the facts on the disappearance of Nancy Guthrie, or you still need to wrap your head around the ditty verdict, we're breaking it all down step by step.

12:19And we're not just lawyers, we're also husband and wife. It makes for some pretty entertaining episodes. Listen to Legally Brunette on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Throughout 2017, Shu's personal life was in the dumps. Shu really starts to sound like he's stuck. Reading his diary, you can see him questioning his life choices. May 19th. Feeling agitated in past couple days. Feeling like I'm abandoned by the whole world. Work, relationship, money. None of it is going well. On the romance front, he'd been spending a lot of time with one of his mistresses.

13:02Someone he worked with at the MSS, actually. the one he called Peach in his diary. But now, things with Peach were taking a turn. April 28th, message to Peach, but didn't receive any reply. Not going to reach out anymore. Speaking of a relationship, Peach obviously doesn't care anymore. Not even replying to messages. Breakup is real. As the summer wore on, things only got worse. August 17th, Peach, heartless. Saw me in the rain yesterday morning. Walked by with her umbrella without stopping. She did not sit next to me at the breakfast either. I reached out to her on WeChat after. She was very cold toward me.

13:46I felt like I was humiliating myself. Things weren't going any better for Shu financially. I lost so much in the stock market. I dug myself into a financial hole. What a shame. Feeling so terrible. When does it all end? Work also sucked. Shu's boss, Jia Rong, had been a mentor to him for years. But now, Shu felt taken for granted. March 27th, Jia rejected meal receipt today. Such an ungrateful person. Has no shame. I will have my revenge. He would get promoted and then be berated. He would have an amazing case and get a beautiful end-of-the-year review. and then be crushed a week later because a decimal point was wrong on a receipt.

14:37April 28th. Relationship with Zhao has dropped below freezing point. Zhao undermined me. I need to adjust my mindset. So that yo-yoing between you're great and you're terrible clearly was having an impact on his state of mind. During dinner, Zhao went nuts and said I'm poor at management. Zhao has turned against me just like that. I think my relationship with him will never be the same again. Having a leader like this, what's the point? Life wasn't where he wanted it to be, even though compared to your average person, to be that high up within the MSS in China would seem like a pretty, you know, auspicious life.

15:18But my interpretation was that he didn't see it that way. At no point in my life, nothing works my way. And the liars get their ways.

15:35But amidst all of this disappointment and humiliation, Xu did still have a job to do. He had hacks to manage and bosses to deal with. He had to keep finding new engineers to come give talks in Nanjing. And if he could find a really good one, it could turn his life, or at least his career, around. He could get back on his feet. And he did. And it wasn't by hacking into a computer or breaking into a hotel room or doing some special spy thing, it was through a tool you've probably used yourself. Something extremely ordinary. LinkedIn? Yeah, LinkedIn. Also known as one of the most boring places on the internet.

16:15But not to the MSS. It was like a candy store. This is James Olson, the former CIA officer we've been hearing from. He was also an expert witness for the prosecution in Hsu's case. LinkedIn is a wonderful spotting tool for the MSS. A spotting tool, meaning they go hang out on LinkedIn looking for sources, for people who have access to the information they want, like aviation engineers. And with LinkedIn, we're handing it to them. They've got their resumes on there. They brag about the projects they've been working on. It's all right there. And that's where Shoe, or someone at the 6th Bureau, spotted the profile of a GE engineer named David Jun.

17:03He had access to very sensitive programs at GE Aviation, working on this composite material, this lightweight technology. Remember that huge engine we stood next to at the Paris Air Show, the GE9X? Well, part of what's so special about that engine is that key elements of it are made out of carbon fiber composite. When you make something out of carbon fiber, you can make it both lighter and stronger than if you'd made it out of most any other material, say metal. And as you can imagine, details about how GE Aerospace uses carbon fiber are kept very tight. They're inaccessible even to most of the company's employees, but not to David Jun.

17:44And that's why when Xu saw this LinkedIn profile, he said, bingo, jackpot, exactly what they want, and I'm going to go get it. David was born and raised in a rural village in China. Being Chinese is also part of what made him an attractive target for the MSS. The MSS is known to specifically target Chinese people living and working abroad, people who might be susceptible to appeals to their sense of patriotism or threats to their family members back home. David was the first in his family to go to college, then moved to the U.S. to get his engineering Ph.D. in composites. He moved to Cincinnati in 2012 to work for what was then called GE Aviation and focused on a part of the engine called the fan containment case.

18:31We really wanted to talk to David Jun for this series. Drake and I have approached him multiple times over the years we've been reporting on this case. He's declined to talk to us each time. So there's a lot we don't know about him, but we do know LinkedIn is part of how Xu and the MSS spotted him. And we know what they did next.

18:52They reach out. Obviously, Xu doesn't say, Hi, I'm from the MSS and I'd love to explore how we can collaborate to serve China. The MSS is smarter than that. So Xu doesn't even make the first contact. Instead, it's a dean at NUAA. Hello. I'm sorry to bother you. I, Chen Feng, am in charge of the International Cooperation and Exchange Office at the Nanjing University of Aeronautics and Astronautics. I learned from your online resume that you have accumulated a wealth of... The MSS recruited a respected person to make the first contact. That added to the likelihood that Jing would be impressed, would be flattered that someone of that stature would be reaching out to him personally.

19:41Many eminent talents like you, Chen Fung continued, come to NUAA to share their expertise. NUA can pay for the cost of your trip back to China for the exchange. If you are interested, please feel free to contact me. David, it seems, was flattered by the invitation. Chen Fong, how are you? Thank you for your email. I've been working at GE for over 10 years. After graduating with a doctorate in the U.S., I first worked for five years at GE's R &D department. Plus, he already happened to be planning an upcoming trip to China. At the end of May, to see my parents. My hometown is in Chuzhou. When I pass by Nanjing, if time allows, I am happy to pay a visit to NUAA.

20:26I can confirm once my itinerary is finalized. The emails between David and Chen continue through the spring into early May. And as they do, Chen gets more and more specific about what he wants David to share in his talk, and even what it could be called. application, design, and manufacturing techniques of composite materials in aircraft engines. Composites. David's careful in his response. He says he can't discuss any proprietary information from his work. But before he goes to China, he does something that will come back to haunt him. He copies about 41 ,000 files off his GE work computer. And then, as he's getting ready for his trip, he transfers five of those files onto his personal computer, the one he's planning to take to China.

21:13At no point does he mention any of this to anyone at GE.

21:21On June 1st, 2017, David Jun arrives in Nanjing. Chen Feng picks him up and takes him to his hotel, which is on the NUAA campus. The next morning, over tea in the hotel lobby, Chen Feng introduces him to a man who he says works with the university. He says the man's name is Chu Hui. Surprise, surprise, it's Shu Yanjun. The group goes to lunch, then David gives his presentation to a room of about 25 people. Jing gave the talk. Of course, they raved about it, how smart he was. And they're asking questions. But David doesn't answer most of the questions because he says they touch on sensitive GE work.

22:01They're kind of probing. They're seeing how far he will go, whether he is someone who can be induced to talk more than he should. After the presentation, Chen Fung hands David cash $3 ,500. He says it's for the talk and to cover his travel. At dinner that night, Chu Hui, a.k.a. Xu Yanjun, presents David with two boxes of fancy tea. They say their goodbyes, and David heads back to the U.S. We reached out to NUAA and Chen Fang for comment, but neither responded. Once David is home, Xu Hui messages him over WeChat to thank David for his talk. He invites him to come back soon. You're welcome to visit Nanjing again next year.

22:50Six months pass. Xu goes to the Paris Airshow. Peach breaks his heart. His boss continues to riot him. And then, in December, David Jun says he's coming back to China. Hello, department head Chu. It's been a while since we last caught up. David says he has another trip booked, and he seems eager to give another talk at NUAA. Xu seems eager too. He responds just a few hours later. I will try my best to arrange it for you. Come stop by Nemjin, and we can have a chat. Welcome back. As the messages continue, David repeatedly asks Xu what material he should bring with him to China. He no longer seems concerned about revealing sensitive GE information.

23:31Instead, his main concern seems to be giving Xu what he wants. For Xu, this had to feel like a huge break. He had an enthusiastic source inside GE, working on one of the company's most coveted technologies, a potential goldmine. But David Jones wasn't writing these messages himself. He was being told what to say. We had to have the communication look authentic. And at this point, of course, they're actually talking to Bradley Hull. FBI Special Agent Bradley Hull. We had to make the story seem as accurate and truthful as possible. I wanted for my counterpart in the MSS to see and to read and to think, He's still my guy.

24:15He's still working for me. The goal of a good intel operation is to talk to the officer, you know, spy v. spy. David was now working with the FBI. That's who Shu Yanjun was talking with. And he was falling for it. That's when you cast your line to see if they'll at least nibble. And they bit.

24:43Hey, everyone. It's Emily Simpson and Shane Simpson from the Legally Brunette podcast. Each week, we're bringing you true crime through a legal lens. Whether you want all the facts on the disappearance of Nancy Guthrie or you still need to wrap your head around the ditty verdict, we're breaking it all down step by step. And we're not just lawyers. We're also husband and wife. It makes for some pretty entertaining episodes. Listen to Legally Brunette on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. This is Tom Keen inviting you to join us for the Bloomberg Surveillance Podcast.