Sue Mi Terry, left, a senior fellow at the Council on Foreign Relations, is seen with two officials of the National Intelligence Service (NIS), who were identified as NIS Handler- 2 and 3, respectively, at an upscale Greek restaurant in Manhattan in this surveillance footage presented by the Federal Bureau of Investigation. Yonhap

The dramatic rise and fall of Sue Mi Terry, a senior fellow at the Council on Foreign Relations, could easily serve as fodder for a spy novel.

Terry, born and raised in Seoul until the age of 12, was once heralded as a model immigrant and a source of inspiration for ambitious Korean Americans, owing to her successful career trajectory. After earning a doctoral degree in international relations from Tufts University, she secured coveted positions in government, beginning as a senior analyst on Korean issues at the Central Intelligence Agency (CIA). She later served as director for Korea, Japan, and Oceanic Affairs at the National Security Council from 2008 to 2009. Following her government roles, the now 54-year-old Terry has worked with prestigious think tanks in Washington, D.C., and New York, specializing in Korean affairs. Over time, she has emerged as one of the most sought-after experts on North Korea.

Her distinguished career in foreign policy led her to appear in a film. In 2023, she featured prominently in the documentary "Beyond Utopia," which chronicles the perilous journeys of North Korean escapees seeking freedom. Directed by Madeleine Gavin, the film earned a nomination for the 2023 British Film Award for Best Documentary and was shortlisted for the 2024 Oscar for Best Documentary.

For two decades, Sue Mi Terry's career enjoyed smooth sailing until recently, when it took a drastic turn. She is now accused of spying for South Korea, an allegation she vehemently denies.

On July 16, Terry was charged with offenses that she allegedly worked as an unregistered agent for the South Korean government which, if found to be true, is in violation of the Foreign Agents Registration Act (FARA). According to the U.S. Attorney's Office, Southern District of New York, Terry had "provided Korean intelligence officers access, information and advocacy in return for luxury goods and funding" for a decade and has been charged with one count of conspiracy to violate FARA, which carries a maximum sentence of five years in prison, and one count of failure to register under FARA, which also leads to five years behind bars. She was arrested and released on bail a day later.

Terry has denied the allegations against her. In an interview with the Korean daily newspaper Chosun Ilbo, Terry's defense attorney, Lee Wolosky, asserted that the accusations were flawed and baseless. He stated that Terry has never worked as an agent for South Korea and has not held a security clearance for over a decade since leaving government service. Wolosky emphasized that Terry's views expressed in the media have remained consistent and independent of influence from the South Korean government. The attorney's statements were translated into Korean and published online on Tuesday.

Despite her denial, the media is quick to respond to the allegation because otherwise it could hurt the integrity of their other published works. In editor's notes accompanying opinion pieces written or co-authored by Terry, The Washington Post disclosed that she is under investigation for alleged violations of FARA, adding, "If true, this is information that would have been pertinent for The Post's publication decision."

Foreign Affairs magazine took similar measures, writing that "all contributors should disclose any affiliation or activity that could present a genuine or perceived conflict of interest or call into question the integrity of their work."

In this photo captured from the indictment document, a man identified as NIS handler-3 is purchasing a $3,450 Louis Vuitton handbag for Sue Mi Terry standing near him from a store in Washington D.C. on April 16, 2021. Yonhap

'NIS bashing'

The U.S. prosecutor's indictment of the Korean American has had a ripple effect on South Korea.

The NIS has been suffering the consequences of an exposed influence operation, facing mounting calls to reform as two agents were caught on camera during a covert mission.

The NIS is currently drawing widespread criticism and ridicule as its exposed operation in the U.S. has become a laughingstock.

In a media interview, former NIS Director Lee Jong-chan criticized the intelligence agency for mistreating its key informant. Others have also condemned the NIS for its mishandling of a covert operation that was exposed by FBI agents. The indictment document from the U.S. Attorney's Office identifies two NIS officials as "NIS Handlers- 2 and 3." They were caught on camera treating Terry at upscale restaurants in Manhattan and purchasing luxury handbags and coats. Handler-3 succeeded Handler-2, who was the NIS chief of station in Washington D.C. until August 2020.

"I bet this is not the first time that the NIS was mired in trouble overseas because of its clumsy, unprofessional handling of covert operations," Rep. Wi Sung-lac of the main opposition Democratic Party of Korea told The Korea Times in a telephone interview. "My impression is that it didn't learn properly from its past failures and an incident like this happened again."

Wi, who served as South Korean ambassador to Russia from 2011 to 2015, criticized the NIS, citing concerns over its agents' inadequate skills and controversial tactics. He stated that members of the National Assembly Intelligence Committee, including himself, will hold a meeting to address the issue. The NIS director and key officials will be summoned to attend and respond to questions about the incident, he added.

Choo Jae-woo, a professor at Kyung Hee University, said the NIS officials caught on camera during their covert influence operation in the U.S. show two aspects of the intelligence agency.

"It shows where the NIS stands today. The NIS officials caught on camera during the covert operation are the direct result of the purge-like reshuffles conducted during the previous Moon Jae-in government," he said.

He was referring to reshuffles that replaced top NIS officials and other ranking staffers with individuals close to Moon. "What happened later is that unprepared individuals replaced well-trained agents and were sent to foreign stations for covert operations," he said. "The U.S. government's indictment of Sue Mi Terry is the consequence of politically-motivated reshuffles," he added.

The professor said that NIS officials appeared to have overlooked the confidential nature of their operation, possibly due to their misunderstanding of U.S. protocols.

"The U.S. is South Korea's ally, so they might have thought that they would be fine even though their covert operation was detected," he said.

The U.S. government took the case seriously.

In a press release on July 17, U.S. federal prosecutor Damian Williams said Terry, a former CIA and White House employee, allegedly "sold out her positions and influence to the South Korean government in return for luxury handbags, expensive meals and thousands of dollars of funding for her public policy program."

Williams warned against the potential violators of FARA, saying that violators will face grave consequences.

"The charges brought should send a clear message to those in public policy who may be tempted to sell their expertise to a foreign government to think twice and ensure you are in accordance with the law," he said.

Christie M. Curtis, acting assistant director in charge of the Federal Bureau of Investigation, characterized the U.S. government vs. Terry case as a grave incident that threatens U.S. national security.

"Compromising national security endangers every American by weakening our defenses and putting lives at risk. Sue Mi Terry, a former CIA and White House official, was arrested for allegedly acting as an unregistered agent for South Korea," she said.

Sue Mi Terry speaks at a forum at Jeju International Convention Center on the resort island, May 29. Yonhap

The Office of the President of the Republic of Korea engaged in a blame game, stating that NIS officials involved in the influence operation will face the consequences. A high-ranking official, speaking on condition of anonymity, informed reporters that the office will instruct the NIS to conduct an internal investigation to identify those responsible for the incident and ensure accountability.

But the official tried to distance the Yoon government from the operation, stressing that the previous Moon Jae-in administration, and not the current Yoon Suk Yeol government, is responsible for the incident. "The NIS agents were caught on camera when Moon was in office," he said.

His criticism, however, has sparked public skepticism. The NIS's operation continued unabated even after President Yoon Suk Yeol took office on May 10, 2022, yet no actions were taken. The Yoon administration did not replace Handler-3, one of the two key NIS agents involved in the exposed operation. Reports indicate Handler-3 is a close aide to Seo Hoon, the controversial former NIS director appointed during the Moon administration. Handler-3 continued to collaborate with Terry in Washington D.C. even after Yoon's inauguration as president in May 2022.

On June 5, 2023, over a year after Yoon's inauguration, Terry was questioned in a voluntary interview with FBI agents and the same day her residence was searched.

Experts share the view that the NIS's exposed influence operation, while serious, is unlikely to significantly impact South Korea's diplomatic relations with the U.S.

Ahn Ho-young, former South Korean ambassador to the U.S., said the impact of the espionage allegations on relations between the two countries will be minimal.

"We don't need to overreact, as cases like these occur frequently. The distinction is that this instance became public knowledge," he said.

Choo at Kyung Hee University concurred with the retired diplomat.

"Sue Mi Terry's alleged violation of FARA, if found to be true, is her personal problem and the U.S. government would not link the issue to its bilateral relations with South Korea," he said.

Wi expressed concern that the thwarted operation might damage South Korea's credibility as a U.S. ally.

"The NIS, as a state institution, raises concerns that the U.S. government may perceive South Korea as engaging in espionage against it," he said.

Korean community in US

While South Korea-U.S. relations may endure, there is apprehension among Korean Americans regarding the repercussions of the South's unsuccessful influence operation.

Asking not to be named, a Korean American based in Washinton D.C said there is a sense of great shock and surprise at the indictment and arrest of Sue Mi Terry.

"I've had calls and talks with other people in the Korea watchers community and they are all shocked of course," he said. "I feel that this will ultimately be a minus and a negative impact on the relationship between local think tanks and the ROK government, which despite their other ulterior motives, do want to help the think tanks be a conduit for messaging the ROK government's positions."

If the allegations raised by the U.S. Attorney's Office are true, he said Terry was inappropriate.

"As for Sue Mi, she should have known better, yet she obviously didn't. Lying before Congress and accepting high-end gifts is the stupidest thing anyone can do and I am just surprised she did this so long and either didn't care or was not afraid of the consequences," he said.