Intelligence

DATE=06/09/05

TYPE=CORRESPONDENT REPORT

TITLE=AUSTRALIA CHINA DEFECTORS (L ONLY)

NUMBER=2-325145

BYLINE=PHIL MERCER

DATELINE=SYDNEY

CONTENT=

VOICED AT:

HEADLINE: Australia Hints at China Spy Ring Investigation

INTRO: Australia has given a hint that its intelligence agencies are investigating claims that hundreds of Chinese spies are operating on its soil. The allegations have been made by two Chinese men seeking asylum in Australia. From Sydney, Phil Mercer reports.

TEXT: Both men say they are seeking sanctuary in Australia because of what they describe as China's abuse of its political opponents.

One of the men, diplomat Chen Yonglin, alleges that China has one-thousand secret agents working in Australia.

Mr. Chen was a first secretary at China's consulate in Sydney. He walked out almost two-weeks ago and has been in hiding with his wife and daughter ever since, awaiting the outcome of his asylum application.

The other man seeking Australia's protection is Hao Fengjin, who says he was an officer with China's internal security agency.

He arrived in Australia on a tourist visa in February and, like Mr. Chen, is still waiting to see if Canberra will let him stay.

Both men say that China has an army of agents spying on Australia.

In Canberra, Attorney-General Philip Ruddock has indicated that Australian authorities are investigating these allegations.

/// ACT PHILIP RUDDOCK ///

"The difficulty for me in relation to these matters is I can not talk about ongoing activities in which our security agencies are involved. It compromises them. Traditionally we do not speak about them. But it would be naive to believe that matters that are reported on are not matters that the organizations that work in this area would not be aware of and wouldn't act on."

/// END ACT ///

The future of both men remains unclear.

The granting of political asylum in Australia is extremely unusual, but both the fugitive diplomat, Mr. Chen, and Mr. Hao could be eligible for refugee visas. One Australian official has said they are not in danger of being immediately returned to China.

Rights activists and some opposition politicians have said they fear the men's asylum cases could be influenced by Australia's efforts to negotiate a free-trade deal with China. China is Australia's third-largest trading partner, worth nearly 23-billion dollars a year.

Australian Prime Minister John Howard denied that trade would be a factor.

Beijing has strongly denied the allegations made by the two Chinese men and has described their claims as "total slander." (SIGNED)

NEB/HK/PM/MW/KPD/RAE