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Senior RCMP officials fingered Canada's spy agency as the culprit in the sanitizing of a secret study's explosive conclusions about Chinese espionage and criminal activities in Canada, newly released documents show.

The documents -- an exchange of letters between the two agencies about the conclusions of the controversial Sidewinder probe -- reveal that CSIS officials tried to alter information and delete material in ways that RCMP officials said undermined the report's integrity.

"The service did not and does not support either the findings or the focus of the original draft, produced under the banner of Project Sidewinder," CSIS acknowledged in a letter to Chief Superintendent Richard Proulx, director of the RCMP's Criminal Intelligence Directorate. The name of the CSIS official who signed the letter was deleted.

The letters, made public in Ottawa yesterday, add credence to claims by federal intelligence and law-enforcement sources that CSIS watered down a hard-hitting 1997 joint report on criminal operations in Canada by Chinese intelligence services and triad gangs for political reasons.

That report, details of which were revealed in The Globe and Mail last week, concluded that Chinese intelligence services and triad gangs worked closely together on espionage and crime in Canada. But a revised, softer version of the report was produced in 1999, and it remains classified.

Intelligence sources have said the original Sidewinder report was watered down by CSIS to allay concerns that it might damage Canada's relationship with China at a time when the federal government was trying to improve relations with the world's largest Communist state.

The 1997 report concluded that Chinese triads and Beijing's spies, working in tandem on smuggling, nuclear espionage and other operations, pose a serious security threat to Canada.

But CSIS director Ward Elcock has dismissed it as a "conspiracy theory" that cannot be substantiated by facts.

Chief Superintendent Proulx complained in a letter to CSIS that the spy agency wanted to delete facts from the 1997 report and alter other material to make the final product inaccurate.

A declassified copy of the Proulx letter and other RCMP-CSIS correspondence were obtained by Canadian Reform Conservative Alliance MP John Reynolds, who said the documents are evidence that the Liberal government is afraid to offend China for economic reasons.

By coincidence, the government announced yesterday that a senior member of the Chinese Communist Party Politburo, Li Ruihuan, will make an official visit to Canada next week. Prime Minister Jean Chrétien plans to lead his second major trade mission to China later this year.

Solicitor-General Lawrence MacAulay, the minister responsible for both the RCMP and CSIS, said in an interview that he agrees that Chinese triads are criminal gangs that need to be tracked by governments worldwide. "It's something CSIS and the RCMP have to keep a very close watch on."

Mr. MacAulay said, however, that he does not believe that the triads and the Chinese government's intelligence services are in league. He said he came to that opinion after reading the final version of the Sidewinder study.

The original 1997 report, however, reflects the view of RCMP and CSIS analysts at that time that the Beijing government and its espionage services, Hong Kong tycoons and Chinese gangs, or triads, were working together to win influence with Canadian politicians, steal high-tech secrets, launder money and gain control of Canadian companies in real estate, media and other sectors.

"In many ways, China remains one of the greatest ongoing threats to Canada's national security and Canadian industry," the study says.

A small team of analysts from the RCMP and CSIS worked for about two years using classified files of investigators at both federal agencies. Copies of the original draft were destroyed or kept under lock and key until The Globe and Mail obtained one last week.

The Proulx letter, dated May 4, 1998, said the rewritten draft was changed significantly from the original. "It becomes clear that a substantial amount of information contained in the original project has been altered, sometimes inaccurately, and in some cases removed completely," his letter said.

Chief Superintendent Proulx complained that CSIS wanted to drop all of the recommendations from the original report, including the creation of an expanded Chinese joint task force that would include not just CSIS and the RCMP, but also Customs and Immigration officials and experts from the Department of Foreign Affairs and International Trade.

Deleted sections needed to be put back, he wrote, because they "are integral to the integrity of the original project" and are needed to make sure the report remains "relevant and factual."

He told CSIS that "as part of the original team researching and preparing this paper we are dedicated to its accuracy and relevance."

CSIS wrote back two weeks later, saying it is also interested in an accurate report, but "the service did not and does not support either the findings or the focus of the original draft."

The final exchange of correspondence was a letter written seven months ago by Robert Fahlman, the officer in charge of the analysis at the RCMP Criminal Intelligence Directorate, saying the force had provided sufficient background information to support the Sidewinder project.

Chief Superintendent Proulx was on leave yesterday and could not be reached for comment. RCMP spokesman Sergeant Mike Gaudet said relations between the RCMP and CSIS have improved since the time of Chief Superintendent Proulx's 1998 letter.

Mr. Fahlman suggested yesterday that the newly released letters reflect his view of the accuracy of the original draft.

Mr. Fahlman, who is now on secondment to Interpol, the international police organization in Lyon, France, said it remains an interesting question why CSIS was so insistent on making radical changes to the original Sidewinder study.

The Security Intelligence Review Committee, an independent watchdog panel that reports to Parliament on the activities of CSIS, is investigating whether the original Sidewinder report was shelved for political reasons. The committee is expected to complete its investigation within a month.

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