China has attempted to obtain internal intelligence and establish a network of whistleblowers within the Federal Reserve, the new GOP report says

The Chinese government was trying to obtain sensitive internal information and build a network of influence and whistleblowers inside the Federal Reserve, according to a new report released Tuesday by Republican staffers on the Senate Homeland Security and Governmental Affairs Committee.

The committee staff report by Senator Rob Portman of Ohio, the senior member, did not conclude whether the attempts, which included the jailing of a Federal Reserve employee, were successful.

According to the report, China has been targeting the Federal Reserve System since at least 2013, trying to recruit US-based economists to exchange information for money and other benefits. Thirteen Federal Reserve employees working at eight of the Fed’s 12 locations have been identified as “P-networks,” according to a Federal Reserve analysis, which they deemed of potential concern, the report said.

According to the report, one of the members of the “P-Network” was arrested four times during a trip to Shanghai in 2019 and his family was threatened. The Fed official’s phones, computers and contact information were hacked during his trip to China, and Chinese officials copied the contact information of other Federal Reserve officials, the report said.

The Senate committee received the Federal Reserve’s counterintelligence analysis on the P-Network in 2020, but said the central bank now disputes many of the findings. At least one of the network’s employees was fired for “violating certain regulations.” [Federal Reserve System] Rules,” according to the committee’s analysis. NBC News did not verify the Federal Reserve’s original analysis.

The report also found close links between Federal Reserve and People’s Bank of China officials, Chinese media and the Chinese Thousand Talents Program, which US intelligence officials say encourages industrial espionage.

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At least one Fed employee attempted to transfer large amounts of data to an outside website in an unauthorized transfer after having “continuous contacts with Chinese nationals and universities,” according to the report. The report does not say whether the transfer was successful.

The Senate committee staff criticized the Federal Reserve for not doing better oversight of its own employees, citing a “lack of internal counterintelligence expertise at the Federal Reserve or sufficient ongoing cooperation with federal law enforcement and intelligence agencies.”

The Federal Reserve recently told the committee that some of the information it provided in its 2015-2020 counterintelligence analysis reports could no longer be verified, according to a source familiar with the Senate investigation.

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The source also said the Federal Reserve has resisted security measures that could mitigate some threats, like reporting foreign contacts. The FBI has made 70 recommendations for better security measures, and to date the Fed has only implemented one or possibly two, the source said.

Two weeks ago, the committee received a classified briefing from the FBI that, according to an official familiar with the investigation, backed up much of the information about the threat to the Fed.

Fed Chairman Jerome Powell strongly opposed the report in a letter to Portman, citing “strong concerns about the claims and implications in the report.”

“We are deeply concerned by what we believe to be unfair, unsubstantiated and uncorroborated allegations in the report about certain individual employees,” Powell said. “We are confident that Federal Reserve employees understand their obligations and are committed to maintaining both the confidentiality of sensitive information and the integrity of our workforce.”

The Chinese government, FBI and Federal Reserve did not immediately respond to requests for comment.

https://www.nbcnews.com/politics/congress/china-tried-obtain-internal-info-build-network-informants-federal-rese-rcna40088 China has attempted to obtain internal intelligence and establish a network of whistleblowers within the Federal Reserve, the new GOP report says

Fry Electronics Team

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