TAIWAN: SATELLITE PROGRAM IN LIMBO

S E C R E T AIT TAIPEI 004045

SIPDIS

NOFORN
SIPDIS

STATE FOR EAP/TC AND EC/NP CHRIS KESSLER

E.O. 12958: DECL: 12/04/2015
TAGS: TSPA PREL ETTC ECON TW
SUBJECT: TAIWAN: SATELLITE PROGRAM IN LIMBO

REF: A. TAIPEI 2379


B. TAIPEI 3745

Classified By: AIT ECONOMIC CHIEF DANIEL K. MOORE FOR REASONS 1.4 B/D


1. (S/NOFORN) SUMMARY: National Space Program Office (NSPO)
Director Lance Wu told AIT November 30 that his deputy, Hsiao
Chiu-teh, was under investigation by the Ministry of Justice
Investigation Bureau (MJIB) for allegedly passing secrets to
members of the Legislative Yuan (LY) and the press. The
focus of the investigation is the Cyclops remote sensing
project, a joint U.S.-Taiwan project whose main clients are
Taiwan's National Security Bureau (NSB) and Ministry of
National Defense (MND). Wu unrealistically requested U.S.
intercession to keep the project afloat because funding has
been suspended by the legislature. On December 4 Wu told AIT
he understands another funding request will be made for
Cyclops, but not by the NSPO. END SUMMARY

NSPO DEPUTY UNDER INVESTIGATION FOR LEAKING SECRETS
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2. (S/NOFORN) ESTOFF met with NSPO Director Lance Wu
November 30 for a readout on news reports that his deputy,
Hsiao Chiu-teh, had leaked secret information to legislators
and the media concerning a remote sensing satellite. Wu
stated information on the classified project, dubbed
"Cyclops", to develop a 0.5 meter resolution remote sensing
satellite was illegally leaked to the public through
legislator Liao Pen-yen of the Taiwan Solidarity Union (TSU).
According to Wu, when the United Daily news published
articles on October 10 and 24, 2005 revealing details about
the project, MJIB officials became suspicious. In February
2006, another article appeared in the "New Taiwan" weekly
giving further details of the project. MJIB started an
internal investigation, resulting in the search of Hsiao's
home and office and his arrest on November 21. Hsiao has
since posted bail and cannot leave the country but continues
to report to work.

CYCLOPS: IN LIMBO
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3. (S/NOFORN) Cyclops is meant to replace Formosat-2 when
the latter is decommissioned in 2009 (note: Formosat-2 is a 2
meter broadband resolution satellite). Because of its
classified mission, the project involves the National Science
Council, NSB and MND. In the November 30 issue of New Taiwan
weekly, Legislator Liao claimed that what was purportedly an
open source "commercial" satellite venture had
surreptitiously become a highly classified project shrouded
in secrecy. Liao claims that the NSPO website carries basic
data on the Cyclops. Liao also claims that high level NSB
officials told him the procurement of the satellite was not a
secret--only its ultimate flight path and image acquisition

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plan (note: the flight path would include sensitive areas of
China.) In the same article, Hsiao claims he never saw any
classified documents regarding the project and believes he
was framed by those who wanted to see this project completed
without any interference. As it stands now, funding for the
project has been frozen by the LY and NSC Minister Chen
Chien-jen has asked NSPO to resubmit a complete proposal
together with a feasibility study for submission to the
project review committee. According to Lance Wu, the next
funding request to the LY for Cyclops will not be made by
NSPO, but by MND and/or NSB.

U.S. HELP TO SAVE CYCLOPS?
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4. (S/NOFORN) Although Wu lamented that morale at NSPO had
suffered due to the incident, he believes the leaks only
involve Hsiao because no one else involved in the Cyclops
program at NSPO was close to Hsiao. Wu also believes that
Hsiao, a political appointee, probably got the information
through his contacts at MND and then passed that information
to legislator Liao Pen-yan. It is not clear why Liao would
personally get involved in this classified project, Wu
complained to AIT that he has said all along that the Cyclops
project should have been a classified MND-funded project and
not a Science Council project open to the legislative review
process. Wu suggested that National Security Council
Secretary General Chiou I-jen had good relations with the

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Department of State and Wu implied AIT should seek Chiou's
support for continuation of the project (Note: AIT does not
support the suggestion).

TOUR OF THE FACILITIES
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5. (S/NOFORN) After the conversation, Wu conducted a tour of
NSPO facilities, including a staging area equipped with
vibration simulators and an assembly area for satellite
components. The facilities were idle at the time of the
visit. Most equipment was of U.S. manufacture. AIT also
visited the Formosat-2 image processing center, where a large
poster-sized photo of the suspected North Korean nuclear test
site was displayed. NSPO officials said that they could turn
out a picture 10 hours after a request. They have ground
stations in Kiruna, Sweden and Fairbanks, Alaska, connected
with local receiving stations in Tainan and Miaoli.

COMMENT
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6. (S/NOFORN) Although Wu assured AIT that things were under
control at NSPO, the investigation into the deputy director
is not over and new information may be uncovered. This
incident raises questions about the management of NSPO and
its mission. NSPO's leadership of the Cyclops project has
been brought into question by the media coverage since
October 2005 and Hsiao's arrest. Wu's statement to AIT that
future Cyclops funding requests will be handled by either the
NSB or the MND suggest bureaucratic control is shifting away
from NSPO to one or both of the other agencies.
Unfortunately, it is not clear at this point exactly how
control of the project may be excercised. We believe NSPO
will have to remain involved in some capacity because it has
the technical expertise in space-related sciences. END
COMMENT.
YOUNG