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A "well-educated", "sophisticated" Australian businessman received envelopes of cash from suspected Chinese spies in exchange for handwritten reports on Australia's foreign alliances, a court has been told.
Alexander Csergo, 55, is accused of accepting money from two spies dubbed "Ken" and "Evelyn" in exchange for reports on Australian defence, economic and national security arrangements while he worked in China during Shanghai's extended COVID-19 lockdown.
The AUKUS and Quad alliances, lithium mining in Australia and "iron ore risk" were among the topics sought, Australian authorities allege.
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The communications and technology infrastructure consultant was arrested and charged on Friday.
He had faced weeks of questioning by Australian Security Intelligence Organisation and federal police and an extensive search of his phone and laptop, including WeChat messages, Downing Centre Local Court was told on Monday.
Csergo allegedly conceded early in the interview process that he suspected Ken and Evelyn were spies soon after meeting them but remained in contact with them for two years.
"He clearly has links to the Chinese state and two people he clearly thinks work for the MSS (Ministry of State Security)," Commonwealth prosecutor Connor McCraith told a Sydney court.
"He also travelled back to Australia with a shopping list."
The so-called shopping list was discovered by ASIO three weeks after Csergo arrived in Australia earlier this year.
McCraith said a reasonable person would have alerted Australian authorities immediately.
Instead, Csergo had continued communication with the male suspected spy, including inviting him to "visit", he said.
Csergo's lawyer, prominent barrister Bernard Collaery, cast the reports as anything but sinister.
He launched a widescale attack on the prosecution, suggesting the publicity of the charge and "shallow" case had ruined the consultant's career.
He cast his client as an extremely experienced, successful businessman who was encouraged and lauded for developing working relationships in China, only to watch the Australian government pass laws in 2018 outlawing reckless foreign interference.
"Businesspeople such as our client know all roads lead to the state, whether it be the state economic intelligence agency or (the Ministry of State Security)," Collaery said.
"Cash payments for consulting reports might have a colour to it in Australia but might be the way it's done in China – it's not necessarily sinister."
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Collaery said all work was publicly sourced documents, plus Csergo's own creative efforts, and was nothing close to espionage.
But Csergo had liaised covertly with two other individuals in preparing the reports, McCraith said.
Magistrate Michael Barko stressed the "very well-educated, sophisticated, worldly businessperson" was entitled to the presumption of innocence.
But he faced a very strong prosecution case, including several substantial admissions.
Csergo told ASIO investigators he met Ken and Evelyn in empty cafes in Shanghai, believed the cafes had been specially cleared for him and believed China's spy agency had assigned him "handlers".
"I don't know what they do in China but in this country, if I were to read those facts to any layperson, they would be highly suspicious of the conduct of the defendant, at the very least," Barko said.
Bail was denied.
Csergo is due back in court in June.
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