Intelligence officers in Australia are investigating sensational claims that a Chinese spy ring tried to plant an agent in federal parliament in Canberra as part of a long-term strategy aimed at influencing government policies.

Prime Minister Scott Morrison described the reported activities by the spy ring as “deeply disturbing and troubling” and said Canberra would look at further tightening laws against foreign interference if necessary.

His government is believed to have lodged an official diplomatic protest with Beijing when the reports first emerged.

The revelations, if true, threaten to further undermine Australia’s already fragile relations with China and could put the country’s growing ethnic Chinese community’s political and business activities under heightened scrutiny.

The man being groomed for the role, Bo “Nick” Zhao, 32, revealed the plot to domestic security agency the Australian Security Intelligence Organization (ASIO) and was found dead in a Melbourne motel room in March. The cause of the car dealer’s death has still not been determined.

ASIO Director-General of Security Mike Burgess confirmed on Monday his agency was taking the accusations “seriously” and that they were under investigation.

Bo “Nick” Zhao in a screen grab from a television interview. Photo: Youtube

“Hostile foreign intelligence activity continues to pose a real threat to our nation and its security,” Burgess said, declining to comment on the alleged individuals involved.

Zhao told ASIO that he was offered $1 million Australian (US$680,000) to fund a campaign during the 2018 federal election in the Melbourne seat of Chisholm, which is home to a large ethnic Chinese population.

He was to run as a candidate for the Liberal Party, which is now and was then part of the governing coalition. The seat was subsequently won by Liberal Gladys Liu, who has since faced allegations of having connections with pressure groups funded by Beijing.

Already a Liberal Party member and living in the electorate, Zhao said he had been lobbied by Brian Chen Chunsheng, a Melbourne businessman who is suspected by Western security agencies of having links to Chinese intelligence. Chen has denied this claim and said he had never met Zhao.

“I don’t know him (Nick Zhao). [I] Really don’t know [him],” Chen said in remarks to the Sydney Morning Herald and Melbourne Age newspapers.

It is believed that Zhao was targeted because he faced financial difficulties after being charged in 2017 with fraudulently obtaining loans to buy cars.

By 2018, when the alleged approach was made, his dealership had collapsed and he owed money to Chinese investors described in reports as “shadowy.”

The shells of the Sydney Opera House are seen through a Chinese flag. Photo: AFP/Torsten Blackwood
The shells of the Sydney Opera House are seen through a Chinese flag. Photo: AFP/Torsten Blackwood

Part of the deal apparently offered by the Chinese intermediary was that he would be given capital to set himself in a new business in Melbourne.

“Nick himself I think was a perfect target for cultivation — a guy who was a bit of a high-roller in Melbourne, living beyond his means, someone who was vulnerable to a foreign state intelligence service cultivating,” said Andrew Hastie, chairman of the Australian parliament’s intelligence and security committee.

Hastie said he had been briefed on the affair last year.

Chen has confirmed he was questioned by security officials at Melbourne airport in March over allegations that he is a senior intelligence agent in China. He has been photographed in a People’s Liberation Army uniform and admitted posing as a journalist at international diplomatic summits.

His business, Prospect Time International Investments, promotes China’s “Belt and Road” development scheme, and he manages a number of firms that have contracts with the Chinese military and security organizations.

The Age reported that Chen met in 2017 with former Thai prime ministers Yingluck Shinawatra and Somchai Wongsawat, together with “other political and business officials”, to discuss possible business partnerships.

The self-exiled Yingluck, ousted in a 2014 military coup and now a fugitive from Thai law on malfeasance charges, was appointed chairwoman of the Guangdong-based Shantou International Container Terminals on December 12, 2018, but inexplicably relinquished the position after media reports exposed the position.

In 2018, Chen was also busy pushing infrastructure projects in the Philippines. China has promised to provide as much as $26 billion in aid and investment to Philippine President Rodrigo Duterte’s Beijing-leaning government, which is in the midst of a “Build, Build, Build” infrastructure drive.

A woman walks by Chinese language advertisements for Australian property in Sydney's Chinatown on June 21, 2017. Photo: AFP/William West
A woman walks by Chinese language advertisements for Australian property in Sydney’s Chinatown on June 21, 2017. Photo: AFP/William West

Australia has tightened its disclosure laws for foreigners in an effort to stop interference in its political system, but reports of meddling continue. In one recent incident, foreign hackers stole access to Parliament House’s cyber-system.

Retiring ASIO chief Duncan Lewis last week accused Beijing of trying to “take over” Australia’s political system through spying operations and also of seeking “a position of advantage” in social, business and media circles.

“Espionage and foreign interference is insidious. Its effects might not present for decades and by that time it’s too late,” he said in an essay.

Similar warnings were issued at the weekend by a defecting agent, Wang Liqiang, 27, who has gone into hiding with his wife and two children in Sydney after briefing ASIO on China’s efforts to influence political systems.

Media reports suggest that Wang has provided a flood of information on how Beijing is infiltrating the Hong Kong pro-democracy movement, its efforts to subvert Taiwan’s elections as well as political activities in Australia.

Parliamentarian Gladys Liu and Prime Minister Scott Morrison in a file photo. Photo: Twitter

One of his more incendiary allegations is that the Chinese Communist Party has ordered assassinations in countries outside China, including some in Australia.

Beijing said on Sunday that Wang had been convicted of fraud and was wanted by police in Shanghai after fleeing on a fake passport. It said he was involved in a $960,000 “fake investment project” over car imports.

Hastie and other Liberal legislators have urged Canberra to grant political asylum to Wang, who has said he is living in fear of retaliation from China. As of Monday, Treasurer Josh Frydenberg said no decision had been made on the matter.