Chinagate: The Movie

I have just posted a trailer to a documentary I am making about the Chinese money laundering and nuclear espionage scandals of the Clinton administration known as Chinagate.

The video, Chinagate: The Movie, is set for a summer release on the internet. I am making the film because I am determined not to let another Clinton back into the White House. We just cannot allow this to happen. Conservatives and moderates need to find a way to come together in '08. I have seen too much fighting amongst here lately and it is disconcerting.

Check out the trailer and let me know what you think of it. I would appreciate any feedback, good or bad. I apologize in advance if I posted this notice in the wrong place.

http://www.chuckbaldwinlive.com/zehr.html
THE CHINA-GATE CANDIDATE

Did Clinton Sell National Security For Campaign Contributions?

By Edward Zehr

The hunt began when U.S. intelligence authorities learned through a series of clandestine telephone intercepts that Beijing had covert plans to influence the American elections in 1996. A Senate committee headed by Sen. Fred Thompson tried unsuccessfully last year to track down illegal campaign contributions from the Chinese, but was successfully stonewalled by the Clinton administration, ably assisted by the minority Democrats on the committee and their propagandist friends in the mainstream press, who mocked Thompson for his inability to deliver on his earlier intimations of foreign interference in an American election.

With the publication last Friday of the first in a series of New York Times articles written by Jeff Gerth, based on reporting done by himself, David Johnston and Don Van Natta, Thompson would appear to have been vindicated in a major way. What the Gerth article offered was no less than a smoking gun in the form of an admission by Democratic fund-raiser Johnny Chung to Justice Department investigators that he had given the Democrats nearly $100,000 that came from the Chinese People’s Liberation Army. The money had been passed to him by Lt. Col. Liu Chao-ying of the PLA, whose father, General Liu Huaqing, was at the time the top military leader in China and a leading figure in the Chinese Communist Party.

According to Chung, $80,000 of the money went directly to the Democratic National Committee. He also said that Col. Liu, an executive in the Chinese aerospace industry, told him the source of the money. Jim Kennedy, special advisor to the White House counsel, commented, “We had no knowledge about the source of Chung’s money or the background of his guest. In hindsight it was clearly not appropriate for Chung to bring her to see the President.” He was apparently referring to a fund-raiser to which Chung had brought Col. Liu. Both had been photographed there with President Clinton.

“Appropriate” doesn’t begin to cover it. Both Clinton and Gore had repeatedly attended fund-raisers at which well-heeled foreign investors had been present, yet they continue to maintain that they knew nothing — NOTHING about illegal foreign campaign contributions. Their story is about as credible as that of the piano player in the house of ill-repute who had no idea what was going on upstairs. The hundred-thousand-dollar question is what the Clinton administration had to do for all those generous donations. When foreign entrepreneurs kick in big time to an American political campaign it’s probably not because they have acquired a passion for this or that variety of American politics. More likely they have some sort of quid pro quo in mind. That is the whole point of making foreign campaign contributions illegal.

Gerth, in his article, mentions that Chung’s account is backed by “supporting documents” — bank records, for example. Chung’s testimony is the first concrete evidence of direct payments from the Chinese government to the Democratic Party, which are, of course, illegal. The existence of a Chinese plan to influence the American election suggests that the hundred thousand dollars passed by Col. Liu may be no more than the tip of the iceberg. The Justice Department is attempting to determine whether other Chinese executives or government officials were involved in such payoffs to the Democrats.

According to Gerth’s Friday, May 15 article, an official of the Chinese government at first denied that there was any plan to influence U.S. elections, but by the following Tuesday, Deborah Orin had reported in the New York Post that “Chinese officials have confirmed that a top generals spy-trained daughter funneled illegal campaign cash to the Democratic National Committee.”

THE GATE SWINGS OPEN

Next month President Clinton travels to China, where he is expected to announce an increase in the pace of collaboration between the U.S. and China in the area of space technology. At the time the illegal contribution was made, the president had made certain decisions intended to make it easier for American commercial communication satellites to be launched on Chinese boosters. This was an important issue for Col. Liu’s company which, in addition to building missiles for the Chinese military, is in the commercial satellite business.

It is also important to certain American companies, especially those in the communication satellite business. Companies such as Hughes, Loral, Motorola, and Martin Marietta, that build satellites had been paying hundreds of millions of dollars to launch their products on U.S. boost vehicles. The cost of using a Chinese booster is just $25 to $85 million per launch, according to Washington Times national security correspondent Bill Gertz. There was a problem, however. The Chinese boost vehicles were not reliable. On average only one launch in four could be expected to succeed.

In an article he wrote for National Review, Gertz explains how the American companies set out to get more payload into orbit for their money. Gertz quotes Henry Sokolski, executive director of the Nonproliferation Policy Education Center in Washington, D.C.,

“Starting in 1993, Hughes and other satellite makers who wanted China to launch their payloads made every effort to limit the possibilities of error.”

In pursuit of this goal the companies were prepared to share “some of America’s most sensitive missile technology.” They conducted a series of discussions with the Chinese Academy of Launch Vehicle Technology on such arcane technical subjects as the adequacy of the “altitude-control system on the Long March launcher” (could Gertz possibly have intended to write “attitude control” here)? Also mentioned in the Gertz article were “test firings of a kick motor for the booster’s last stage.” (The “kick stage” imparts the final velocity vector to the payload and must meet rigorous accuracy requirements). Perhaps the most controversial aspect of the deal is described as follows by Gertz:

“U.S. companies were also involved in giving China the same technology used to launch MIRVs (multiple, independently targeted re-entry vehicles), hydra-warheads that vastly increase the firepower of nuclear missiles.”

Why would U.S. companies do such a thing? Well, take for an example the launch of two “Iridium” satellites on May 2, using a Chinese Long March 2C booster. The Iridium satellites, made by Motorola, will be part of a world-wide cellular-telephone network. The launch was near perfect, thanks to the infusion of U.S. technology, including “state-of-the-art satellite-dispensing technology.” The know-how required to dispense multiple satellites into various orbits is not unlike that used to deliver multiple nuclear warheads to diverse targets. In both situations the problem consists of imparting a highly accurate velocity increment to each payload, whether the final destination is an orbit, or a target on the Earth’s surface. (Note that the term velocity implies both a speed and a direction).

Since there have been recent attempts by people who have only a superficial grasp of the technical details involved to deny that so critical a transfer of military technology actually took place, it is worthwhile to explore this issue in more detail. Henry Sokolski, addressed the matter in a paper he wrote titled “Beyond The Loral-Hughes Controversy: A Decade of US Satellite Transfers And Their Military Significance.”

When Martin Marietta decided to launch their AsiaSat II satellite on a Chinese booster, they were concerned about the quality of the kick motor the Chinese were using. The solid fuel rocket motor had only been used once before in the launch of a Pakistani satellite and the operation had not been entirely successful. In an effort to assure that the kick motor would be sufficiently reliable to launch their satellite, the U.S. companies involved did an analysis to determine whether the grain structure of the solid propellant was properly designed to produce the exact amount of thrust required within the rigorous time constraints.

The thrust program of solid rockets is determined by the shaping of the propellant charge, or “grain.” The speed of combustion and thus the pressure within the combustion chamber is determined by the size of the surface area exposed, and this changes as the propellant burns. Too much surface area exposed at a given time could result in excessive force being applied to the payload, resulting in damage to the satellite. Unless the thrust is precisely controlled in conformance with the guidance program, the payload will not go where it was intended to go.

Although theoretically the Americans involved in the analysis were not supposed to discuss the results with their Chinese counterparts, it would be naive to suppose that the latter did not take -note of any design changes that may have resulted and draw the appropriate conclusions. Other foreign nationals were also involved in the analysis and there is no way to know what information they may have imparted to the Chinese.

The perfection of this kick motor has a direct military significance. The Chinese are presently attempting to adapt the Russian solid fuel SS-25 ballistic missile to their military requirements. This weapon uses a solid fueled post-boost vehicle (PBV) to defeat anti-missile defenses by maneuvering the warhead to evade them. (A purely ballistic trajectory is sufficiently predictable to present an “easy” target to the anti-missile missile). The similarity of the PBV to the kick stage is obvious and the technical improvements to the kick motor are directly applicable to the PBV.

Things didn’t always go smoothly with Chinese satellite launches. In February of 1996 a Chinese Long March booster launched at a facility in Southern China exploded, destroying a $200 million American satellite owned by Hughes Electronics Corp. and Loral Space & Communications Ltd. The two companies analyzed the failure and came up with a number of recommendations on how to avoid such mishaps in future launches. These were presented in a detailed report which pinpointed the cause of the failure as a defect in the booster’s guidance system. Since the Long March rocket is also used to deliver nuclear warheads, the technology transferred in this instance has military value, but the two companies did not bother to check it out with the State Department to determine whether it is legal to share such information with the Chinese, who many in Washington see as a potential future adversary.

After mulling the matter over for several months, the two companies reported to the State Department what they had done. This triggered a Pentagon investigation which concluded that “United States national security has been harmed.”

Rep. Dana Rohrabacher (R., Calif.), Chairman of the House Space and Aeronautics Subcommittee, put the issue in sharper focus:

“It seems what happened was a sterile, coldly calculated decision to fix these problems with no consideration of the national-security implications to the United States.”

Rohrabacher added, “We should not be making their missiles better.” On the face of it, the congressman would seem to have a point. It is conceivable that one day Chinese missiles could be launched at American cities — anyone who doubts this should be aware that there are presently more than a dozen Chinese warheads targeted against American cities and thanks to the technical information we have given them, they will probably be able to hit them.

For the sake of full disclosure, it should be mentioned that Rep. Rohrabacher represents California’s 45th congressional district, where the Delta rocket is made. The congressman is quite outspoken about that aspect of the issue as well,

“Even the perfecting of the Long March for civilian [satellite launch] purposes was a betrayal of American interests because you’re using a technology developed in the U.S., probably at the taxpayers’ expense, in order to enable an economic adversary to defeat Americans in the economic arena,”

This speaks to the growing constituency for economic nationalism as advocated by Pat Buchanan, for as the congressman says, “The real victims here are American aerospace workers who are being sold out by their own companies.”

Indeed, it would seem to be a textbook case of “free trade” harming the national interest, as well as the economic interests of individual Americans. The free trade crowd like to tell us that the loss of low tech jobs to third world countries will be balanced by a burgeoning market for workers with high technical skills in this country. Perhaps they should tell that to the laid off workers who used to build Delta rockets and see how it plays. No doubt the stockholders of companies such as Hughes and Loral will benefit, but apart from that, it is difficult to see how the country or individual Americans benefit from this deal.

Rohrabacher is not alone in voicing such sentiments. Rep. James A. Traficant (D-Ohio) complained of the trade surplus China presently enjoys relative to the U.S.

“China rips us off for $60 billion a year, they steal our nuclear and missile technology, then they sell that technology and those missiles to our enemies. If this policy makes any sense, then we all need a lobotomy.”

Paul Mann, writing in the May 11 Aviation Week, quoted John E. Pike, whom he describes as “an outspoken Washington authority on aerospace, on the national security aspect of the issue”:

“It isn’t just the Dana Rohrabachers of the world who think Clinton’s soft on China. There’s a very strong point of view in this town that China is the enemy — a strategic enemy -and that our relationship is fundamentally adversarial. That’s not confined to the right wing community — the human rights community is not too thrilled with Clinton on this either, and that’s the reason this [satellite export issue] may have some legs.”

The issue does indeed have legs. There are at least three parts to the scandal that are likely to arouse the public’s attention. First, the issue of national security is involved — did the Clinton administration permit, or even encourage, the transfer of technical information to a potential adversary that is critical to national security? Then, there is the issue of illegal foreign campaign contributions. Notice that this is independent of the national security issue. And finally, the scandal touches on the hot button issue of exporting high tech American jobs abroad. Any one of these issues could be damaging to the administration. Mix them and you have a potentially lethal cocktail — provided that the allegations can be substantiated.

DENIAL AND ADDITIONAL ALLEGATIONS

By mid-week, Loral had issued a “fact sheet” denying that the company had provided missile guidance technology to the Chinese. The company also denied that they had given the Chinese advice on how to fix problems in the Long March rocket. In fact, Loral maintains that their employees were specifically told not to render such assistance to the Chinese, in compliance with the export control laws. The “fact sheet” further notes that the license required to export a satellite to China “tightly restricts Chinese access to any part of the satellite and limits the technical data and assistance that may be provided to China”

That sounds nice, but restricting access and limiting technical data on a satellite of which the Chinese have possession is easier said than done. It is the nature of engineering projects that such information tends to be disseminated despite the best intentions of the people who write the groundrules. And it is well to bear in mind that the Chinese are no dummies in matters of science and technology — one need only note the ethnic backgrounds of engineering graduate students in this country to be convinced of that.

Perhaps the best indicator of the benefits accrued to the Chinese from their cooperation with American companies such as Loral and Hughes is the current reliability of their boost vehicles relative to what it was prior to the initiation of cooperation. Gerth implies in his New York Times articles that their reliability has greatly improved, but provides no statistics (other than the putrid 25 percent success rate mentioned earlier). The Chinese would be understandably reticent about providing such information regarding a vehicle used to launch nuclear warheads, but their recent track record in launching foreign satellites must be a matter of record. It is difficult to imagine that anyone would want to consign a satellite that cost perhaps several hundred million dollars to a launch vehicle that only worked once every four tries or so.

Regarding the failure of the February 1996 attempt to launch the Long March rocket, Loral says that investigation was conducted by the Chinese alone and that they traced the failure to a defective solder joint — a defect which the “fact sheet” describes as “low tech.”

Loral denies that they and Hughes conducted an “independent” investigation of the mishap. The company implies that the Chinese did not want outsiders poking around in their missiles, but the insurance companies insisted that non-Chinese engineers verify that the Chinese had solved their technical problems, else they would be unwilling to insure future launches with the Long March rocket.

As a long-time consumer of propaganda disseminated by large corporations, governments and other bureaucracies, I am inclined to look for the significant facts in the blank space between the lines. What Loral seems to be saying here is that the reliability of the Long March rocket did indeed show marked improvement following the investigation of the 1996 failure. Otherwise, the Chinese would have been unable to obtain insurance for future launches, which in effect means that they would be out of the satellite business. The Long March rocket has a history that extends over a period of years. Was it a coincidence that the Chinese were unable to solve their reliability problem until Loral and Hughes happened to be there, looking over their shoulder? — without dropping any hints, of course.

Loral insists that the flow of information was one-way, “The review committee’s function was to obtain information from the Chinese, not to help the Chinese solve their problem.” So try to picture this — all these high-tech American companies review the failure investigation conducted by the Chinese. The solution to the problem, so obvious to them by reason of their vast combined experience with launch failures, eludes the Chinese. But do they tell them? Absolutely not — that would be against the rules. Never mind the huge investment that hangs in the balance.

I can’t say what actually happened — I wasn’t there. But I believe that this constitutes what theologians would describe as Ivan occasion of sin.” Perhaps the larger question here is whether we should be having such technical contacts with a potential adversary. Whatever Loral executives may tell us after the fact, you can be certain that the technical people involved were under enormous pressure to get results. Under the circumstances, who can say what information actually changed hands?

The crunch, according to Loral, came when the review committee, in which they, Hughes and other American companies participated, issued their report to the Chinese without first consulting the authorities at the State Department who handle export licensing. This might have been as inadvertent as Loral would seem to imply, but it suggests that the technical people were not operating on the same frequency as the people at State who are charged with protecting U.S. technical secrets. The issuance of that report to the Chinese has become the subject of investigations by the Justice Department and several congressional committees. Loral says that it “does not believe that any of its employees dealing with China acted illegally or damaged U.S. national security.” Which gets back to the point I made earlier — even by their own relaxed standards, Loral management appears to be uncertain about the legality of what actually happened.

Now comes the rub — President Clinton subsequently authorized the export of satellite technology to the Chinese, undercutting the Justice Department’s investigation. This waiver authorized Loral to launch another satellite on a Chinese booster. Loral minimized the importance of the presidential authorization, likening it to waivers that had been issued by other presidents and asserting that it did not authorize Loral to transfer technology to the Chinese.

This is difficult to reconcile with an Associated Press report regarding federal employees in the Pentagon office that oversees exports involving technology that might affect national security. These employees have told House investigators that they were prevented from registering their objections to Clinton’s authorization of the transfer of satellite technology to China.

The Pentagon maintains that the authorization was approved only after a determination had been made that “sensitive missile technology” would not be given to the Chinese, but some employees are on record as saying that they were told that Clinton had already made his decision before they had made their determination.

The office referred to in the article is the Pentagon’s Defense Technology Security Administration. This office approved the technology transfer by Loral, which is still under investigation by the Justice Department.

Pentagon workers have told the House National Security research and development subcommittee that the director of the Technology Security Administration suppressed memos and drafts of their documents that argued against Clinton’s authorization of the satellite technology transfer. The employees said that in order to minimize the paper trail indicative of opposition to the approval, some documents were actually erased.

The director referred to is David Tarbell. Three subcommittee staffers have said off the record that some of his subordinates allege that Tarbell told them prior to the president’s announcement in February that Clinton had already made his decision. At about that time Tarbell is said to have told them not to submit the documents they had prepared that were in opposition to the president’s position and to erase the drafts of memos they had written on the subject.

Tarbell, who is a career government employee, issued the following statement:

“I have no recollection of telling anybody on my staff not to oppose the license or the waiver in this case. I had no idea in advance whether or not the president was going to grant the waiver. Any report that I asked people to eliminate or destroy documents of any kind on this matter is absolutely wrong.”

Why doesn’t anybody who works for the federal government ever state forthrightly, “I didn’t do it”? Why does it always have to be, “I don’t remember doing it”? Is it reasonable to suppose that Tarbell might have told his subordinates not to buck the president on so critical an issue — and then have forgotten doing so? Has the Alzheimer’s epidemic that has raged unchecked at the White House for the past few years now spread to the Pentagon?

Rep. Curt Weldon, R-Pa., the chairman of the House subcommittee, indicated that many Pentagon officials believe that the export of such satellite technology makes possible the transfer of information that could result in marked improvements to China’s ballistic missile force.

Weldon was quoted by the AP as saying, “There was a lot of momentum to get people not to espouse that view because the president had already made up his mind.”

Here we have two diametrically opposed views of what happened -which should we believe? I’ll leave that to the reader to decide. I would note, however, that Tarbell and the Loral officials are saying what one might expect them to say under the circumstances — this is a dog bites man story. On the other hand, raising strong objections to a presidential directive, with intimations that national security may be adversely affected, is not a career enhancing move for a government employee. The landscape is littered with the bleached bones of whistle blowers. The story here is definitely man bites dog.

But there is more to the story, and this is the part that really taxes one’s credulity. The AP report said that according to sources close to the congressional investigation, nine months prior to Clinton’s February decision Tarbell’s office had raised the possibility that Loral and “another defense contractor” (presumably Hughes) may have provided China with “highly sensitive information” in 1996 that the Chinese could have used to improve their ballistic missiles. The AP story quotes a report they obtained from the Congressional Research Service: “DTSA concluded that Loral Space and Communications Co. and Hughes Electronics had transferred expertise to China that significantly enhanced the reliability of its nuclear ballistic missiles.”

Does this perhaps help to explain Mr. Tarbell’s extraordinary loss of memory? The subcommittee staff is curious to know how the same agency that drew this conclusion in 1997 was able to give a green light a few months later to a decision by Mr. Clinton that would transfer even more of the same kind of sensitive military technology to the Chinese.

Perhaps Mr. Tarbell will soon have the opportunity to explain this seeming conundrum. House Speaker Newt Gingrich got into the act last Tuesday with an announcement that he would ask for congressional approval of a select committee to investigate “an effort by a foreign military to penetrate our military system, an effort by some people to give the Chinese secrets in violation of American law.”

Kenneth Bacon, described by the AP as “the Pentagon’s chief spokesman,” gave assurances last week that the reason Tarbell’s office supported Clinton’s satellite export approval was the assurance it provided that “sensitive missile technology” would not wind up in the hands of the Chinese. “There were adequate safeguards in the license,” Bacon was quoted as saying.

Yeah, sure. Say, isn’t Bacon the Pentagon spokesman who told us that it was really okey-dokey for his subordinate to release selected excerpts from Linda Tripp’s security questionnaire, because the information is exculpatory? (Never mind that federal law prohibits the release of such information — if Bacon says it’s all right, why that should be good enough — right?) As to it’s being “exculpatory,” well, Jane Mayer (a smear artist for the New Yorker who at one time had worked with Mr. Bacon at the Wall Street Journal) asked for the information so that she could use it to hang a federal rap on Tripp, alleging that she had concealed her arrest record (on a quashed charge) when she applied for a security clearance. Mayer was promptly backed in this allegation by Secretary of Defense Cohen, who apparently has nothing better to do these days than backstop White House smear campaigns. That doesn’t sound “exculpatory” to me, but then what was I expecting of Mr. Bacon — reason, good sense, the truth?

Last Thursday the Washington Times reported that Bacon had admitted under oath “that he leaked Linda R. Tripp’s personnel file to a reporter even though he knew he might be breaking the law.” Bacon had been deposed by Judicial Watch the previous Friday at which time he admitted that he had “orchestrated the release” of information from Ms. Tripp’s security questionnaire, knowing that he was “probably” violating the Privacy Act in doing this. So much for lies, damned lies and Pentagon press releases.

CLINTON’S MERCHANT OF DEATH

As of 1994, it was illegal to export satellites to China. This policy was changed due largely to the efforts of Bernard Schwartz, the chairman of chairman of Loral Aerospace. In a recent article for World Net Daily, Charles Smith, who has done extensive research on this story, points out that Mr. Schwartz has made donations to the Democratic National Committee that total in excess of one million dollars since 1993.

The ban on sending satellites to China, based on human rights considerations, as well as nuclear proliferation violations by the Chinese, meant that Schwartz’s company would have to launch its satellites on expensive American boosters, such as the McDonnell Douglas Delta, built by American aerospace workers who, unlike their Chinese counterparts, are accustomed to work for a living wage.

Loral therefore importuned the U.S. Government “to aid (the) satellite industry” by removing restrictions on the transfer of satellite technology “where unnecessary” so as to “permit occasional Russian or Chinese launch.”

Schwartz received guidance from then-Commerce Secretary Ron Brown on how to evade the restrictions on exporting satellite technology to China. Instead of applying to the State Department for an export license, Loral could apply to the kinder, gentler Commerce Department. For as Smith points out, although the U.S. applied sanctions to China for exporting missile technology to Pakistan in 1993, it was decided early the following year that these sanctions applied only to satellites licensed by the State Department — applications to export communications satellites licensed by the Commerce Department could be approved.

Smith writes that it has recently come to light how Mr. Schwartz made a trip to China with the full approval of President Clinton on a “Presidential Business Development Mission.” Schwartz had his staff at Loral prepare a sales guide for the trip to give Secretary Brown an overview of Loral’s product line.

I quote from Smith’s article:

“Some of the items Loral suggested for sale include ‘Airborne Reconnaissance Cameras, Weapon Delivery, Target Acquisition, Missile Guidance, Shipboard Target Acquisition, Radar Warning, Missile Warning, RF Jamming, IR Jamming. . . .’ Loral’s list for proposed sale to Red China also included some of the most deadly missiles in the U.S. inventory. The AIM-9 Sidewinder, the massive missile artillery weapon MLRS, the Army’s newest U.S. anti-missile ERINT, the anti-aircraft missile Chaparral, and even an advanced, unmanned air vehicle called Predator.”

I’m old enough to remember a time when Americans reproached their government for allowing scrap metal to be sold to the Japanese on the eve of World War II. The presumption was that this material was used to build bombs and weapons that later killed American troops. We’ve come a long way . . .

According to Smith, a Government Accounting Office report published on May 7 of this year makes clear who authorized U.S. military exports to China. He quotes from the report:

“According to State (Department) officials, since 1990, 11 presidential waivers have been issued removing export restrictions on 21 satellite projects. Presidential waivers were also granted to permit the export of encryption equipment controlled on the Munitions List.”

With regard to the encryption equipment, the May 20 Strategic Investment newsletter reports that Clinton has authorized the export of encryption technology to China that is designed for military use, even though it is the official position of the Clinton administration that the widespread use of encryption software would endanger U.S. security. An American company that attempted to sell such software in this country would be liable to criminal prosecution.

Encryption equipment is also used in communications satellites to make their operation secure from outside interference, in fact, such equipment was included in the payload that was launched unsuccessfully on a Long March booster in February 1996. Loral had given public assurances that the encryption equipment was contained in a black box on board the satellite, which was carefully monitored to ensure that the Chinese did not have access to it.

At mid week, the Drudge Report carried a story based on an account given by a Loral employee that reveals the encryption package was missing when the satellite debris were recovered after the mishap. The Loral source said that he had spoken to one of the engineers at their satellite manufacturing facility about a year after the failed launch. This man is a retired military officer with extensive experience in military “black” programs. His assumption was that the Chinese kept the integrated circuit board used for encryption with the intent of reverse engineering its function for the purpose of espionage.

Just to reiterate, Col. Liu of the Chinese PLA funneled an illegal $100,000 campaign contribution to the Democrats by way of fund- raiser Johnny Chung, who is presently singing like a canary. And who is Col. Liu? Why she just happens to be the daughter of the Chinese General Liu who, in addition to being China’s senior military officer is also a member of the Standing Committee of the Politburo of the Chinese Communist Party, the innermost circle of leadership in the country. But perhaps more significantly, as vice chairman of the Central Military Commission, Gen. Liu ran the effort to modernize the PLA through the acquisition of Western technology. Thus, he was also in charge of the missile deals.

And then we have Mr. Bernard Schwartz, the well-heeled chairman of Loral Space and Communications Co. who by merest coincidence happened to contribute a million bucks to the Democratic Party in recent years. His company is pushing a product line that makes Darth Vader seem a tree-hugging pacifist by comparison — in fact, it would seem that he and Gen. Liu were made for each other. But never mind, there couldn’t be a causal connection here — that might lead people to think bad thoughts about Mr. Clinton. No doubt all of this is just another of those imponderably improbable chains of “coincidence” that only seem to occur in Clinton administration cover stories.

I mentioned earlier three aspects of this scandal that would no doubt blow the minds of a people less sanguine than Americans appear to be at present. There is a fourth consideration as well, the demolition of the long-standing U.S. policy of promoting nuclear non-proliferation, which liberals are supposed to care deeply about. I notice that recently liberals have had some harsh things to say about India for their recent nuclear testing. They might just as well save their breath. Forget all that airy-fairy twaddle about Gandhi and non-violence — India is a big, tough country in a “bad neighborhood” that really couldn’t care less about trendy ivy league cliches regarding non-proliferation. What they see is the “leader of the free world” transferring military technology to the largest country left in the non-free world, which in turn sells it to Pakistan, the main enemy of India, the largest democracy in the world. How should we expect them to react?

Unlike ourselves, the Indians at least have retained some vestige of their inborn survival instinct. We allow our most critical defense secrets to be sold to a potential adversary for a pittance by profiteers and corrupt politicians and then shrug it off as though this were of no consequence. Perhaps we depend too heavily on the assumption expressed a century ago by Otto von Bismarck: “God looks after idiots, small children and the United States of America.”

[Edward Zehr can be reached at ezehr@capaccess.org]
Published in the May 25, 1998 issue of The Washington Weekly
Copyright 1998 The Washington Weekly (http://www.federal.com)
Reposting permitted with this message intact

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

_____________________________________

W. L. MENG, et al.
Plaintiffs,

vs.

BERNARD L. SCHWARTZ
and LORAL SPACE AND
COMMUNICATIONS, LTD.,
et al. Defendants.
_____________________________________ )
)
)
)
) Case No: 1:98CV02859 (RCL)
)
)
)
)
)
)

PLAINTIFFS’ OPPOSITION TO THE PRESIDENT AND

MRS. CLINTON’S MOTION TO DISMISS

Plaintiffs, by counsel, respectfully submit this Opposition to the President and Mrs. Clinton’s Motion to Dismiss.

MEMORANDUM OF LAW

I. Introduction.

This shareholder derivative action seeks to recover the substantial damage done to Loral Space & Communication Ltd. (”Loral”) by its Chairman Bernard L. Schwartz (”Schwartz”) and others who caused the company to become embroiled in a scheme to bribe high level government officials, including the President of the United States, in order to obtain favorable treatment from the United States Government. Plaintiffs’ Amended Complaint alleges that Schwartz secured favorable treatment for Loral by paying bribes in excess of $1,460,000 to the Democratic National Committee (”DNC”) and obtained other organizations affiliated with the Democratic Party. See Amended Complaint at paras. 54, 60, 63-64, 72, 108. Plaintiffs’ Amended Complaint thus raises breach of fiduciary duty and other claims against Schwartz, including a claim that Schwartz violated the Racketeer Influenced Corrupt Organizations Act (”RICO”) by conducting Loral’s affairs through a pattern of racketeering activity.

The Amended Complaint also alleges that Hillary Rodham Clinton devised, agreed to participate in and implemented this unlawful scheme, and that President Clinton and Vice-President Al Gore authorized, agreed to participate in, and also implemented the scheme. Id. at paras. 55-56. The Amended Complaint further alleges that President Clinton and Vice-President Gore accepted the benefits of the contributions generated by the scheme. Id. at 57. The Amended Complaint thus raises common law civil conspiracy claims against the President and Mrs. Clinton, as well as RICO conspiracy claims.

The President and Mrs. Clinton raise two (2) arguments in their memorandum. (1) First, they argue that the President is absolutely immune from a claim for civil damages arising out of his official acts. Because Plaintiffs seek only injunctive relief against the President, that claim is without merit. Second, the President and Mrs. Clinton claim that the predicate acts of racketeering activity alleged in the Amended Complaint lack the requisite “continuity” to state a claim for a RICO violation. This is simply wrong. The President and Mrs. Clinton’s motion must be denied.

II. Factual Background.

Plaintiffs Amended Complaint alleges that, over a four (4) year period, from June 1994 to August 1998, Schwartz paid approximately $1,460,000.00 to the DNC, the Democratic Senatorial Campaign Committee (”DSCC”), the Democratic Congressional Campaign Committee (”DCCC”) and other entities affiliated with the Democratic Party. (2) See Amended Complaint at paras. 63, 78-108. According to Federal Election Commission (”FEC”) records, Schwartz made the following payments between this time period:

(a) On June 7, 1994, Defendant Schwartz paid $100,000 to the DNC;

(b) On April 24, 1995, Defendant Schwartz paid $25,000 to the DNC;

(d) On June 30, 1995, Defendant Schwartz paid $20,000 to the DSCC;

(e) On September 30, 1995, Defendant Schwartz paid $20,500 to the DNC;

(f) On September 30, 1995, Defendant Schwartz paid $20,500 to the DSCC;

(g) On November 28, 1995, Defendant Schwartz paid $100,000 to the DNC;

(h) On February 15, 1996, Defendant Schwartz paid $15,000 to the DSCC;

(i) On April 24, 1996, Defendant Schwartz paid $50,000 to the DSCC;

(j) On June 10, 1996, Defendant Schwartz paid $100,000 to the DNC;

(k) On July 31, 1996, Defendant Schwartz paid $5,000 to the DSCC;

(l) On September 16, 1996, Defendant Schwartz paid $30,000 to the DSCC;

(m) On September 20, 1996, Defendant Schwartz paid $20,000 to the DCCC;

(n) On October 16, 1996, Defendant Schwartz paid $10,000 to the DSCC;

(o) On October 18, 1996, Defendant Schwartz paid $70,000 to the DNC;

(p) On October 24, 1996, Defendant Schwartz paid $5,000 to the DSCC;

(q) On December 20, 1996, Defendant Schwartz paid $6,000 to the DNC;

(r) On January 31, 1997, Defendant Schwartz paid $50,000 to the DSCC;

(s) On April 25, 1997, Defendant Schwartz paid $5,000 to the DCCC;

(t) On June 27, 1997, Defendant Schwartz paid $100,000 to the DNC;

(u) On July 14, 1997, Defendant Schwartz paid $50,000 to the DSCC;

(v) On October 27, 1997, Defendant Schwartz paid $1,000 to the DCCC;

(w) On December 15, 1997, Defendant Schwartz paid $10,000 to the DSCC;

(x) On December 19, 1997, Defendant Schwartz paid $50,000 to the DCCC;

(y) On December 23, 1997, Defendant Schwartz paid $50,000 to the DNC;

(z) On January 21, 1998, Defendant Schwartz paid $30,000 to the DNC;

(aa) On March 2, 1998, Defendant Schwartz paid $25,000 to the DNC;

(bb) On April 22, 1998, Defendant Schwartz paid $100,000 to the DNC;

(cc) On or about May 21, 1998, Defendant Schwartz reportedly contributed $217,000 to the Democratic Leadership Conference, a “think tank” closely associated with President Clinton and the Democratic Party; and

(dd) On August 14, 1998, Defendant Schwartz paid $100,000 to the DCCC.

See Amended Complaint at paras. 63, 78-108.

Plaintiffs’ Amended Complaint also alleges that Schwartz made these contributions to secure favorable treatment for Loral from the Clinton Administration. The favorable treatment alleged in the Amended Complaint specifically consists of the following:

(a) participation in the U.S. Department of Commerce foreign trade mission to China from August 25, 1994 to September 2, 1994, led by then- Commerce Secretary Ron Brown (id. at paras. 63-70);

(b) a waiver signed by President Clinton on February 6, 1996 allowing Loral to launch a commercial communications satellite from China (id. at para. 137);

(c) the transfer on March 14, 1996 of export licencing authority from the U.S. Department of State to the U.S. Department of Commerce, which had more lenient licensing requirements than did the State Department (id. at paras. 117-132);

(d) a second waiver signed by President Clinton on July 9, 1996 allowing Loral to launch additional communications satellites from China (id. at para. 138);

(e) a third waiver signed by President Clinton on February 18, 1998 that not only allowed Loral to launch even more communications satellites from China, but also effectively forestalled any criminal prosecution of Loral and/or Loral officials as a result of an grand jury investigation by the U.S. Department or Justice into the unlawful transfer of highly sensitive, missile technology to the Chinese (id. at paras. 172-180); and

(f) an export licence granted by U.S. Commerce Department on March 23, 1998 allowing Loral to export a commercial communication satellite for launch in China. (3) Id. at 181.

Since Plaintiffs filed their Amended Complaint, they have uncovered additional payments by Schwartz to the DNC, DSCC and DCCC between August 1998 and June 1999 totaling another $595,000.00. According to FEC records, Schwartz also made the following payments during this time period:

(a) On August 11, 1998, Defendant Schwartz paid $250,000 to the DNC.

(b) On October 26, 1998, Defendant Schwartz paid $50,000 to the DNC.

(d) On February 16, 1999, Defendant Schwartz paid $50,000 to the DSCC.

(e) On March 23, 1999, Defendant Schwartz paid $20,000 to the DNC.

(f) On April 20, 1999, Defendant Schwartz paid $25,000 to the DNC.

(g) On May 14, 1999, Defendant Schwartz paid $25,000 to the DNC.

(h) On May 14, 1999, Defendant Schwartz also paid another $25,000 to the DNC.

(i) On June 28, 1999, Defendant Schwartz paid $50,000 to the DSCC.

In addition, Schwartz and his wife just recently paid yet another $40,000 to a special fundraising account created to assist Mrs. Clinton in her bid for the U.S. Senate. See Saffir, Barbara J., “Hillary’s Senate run gets a holiday boost: Big donors attend Washington Gala,” The Washington Times, January 15, 2000, attached as Exhibit 2. In exchange, they were rewarded with an invitation to the President and Mrs. Clinton’s taxpayer-financed New Years Eve gala at The White House, where they sat at Mrs. Clinton’s table. Id. Also improperly attending the “incestuous” event was Attorney General Janet Reno, whose Justice Department is supposed to be conducting a criminal investigation of Schwartz and Loral. See “White House Millennium Guest List,” Associated Press, December 31, 1999, attached as Exhibit 3.

Clearly, Schwartz’ payments to the DNC, DSCC and DCCC and other organizations affiliated with the Democrats and the Democratic Party continue even up to present. These additional payments likely constitute compensation for past quid pro quos, or are compensation for additional quid pro quos that Loral already has received or expects to receive in the future, so long as the President and Mrs. Clinton remain in positions of authority where they can provide illicit favors to Schwartz and his corporate enterprises.

III. Discussion.

A. The Predicate Acts of Racketeering Activity Set Forth in the Amended Complaint Clearly Satisfy RICO’s Continuity Requirement.

A “pattern of racketeering activity” requires the commission of at least two predicate acts as defined by RICO. 18 U.S.C. §§ 1961(1) and (5). The U.S. Supreme Court has made clear, however, that in addition to the requisite number of predicate acts, a plaintiff must show “that the racketeering predicate acts are related, and that they amount to or pose a threat of continued criminal activity.” Edmonson & Gallagher v. Alban Towers Tenants Association, 48 F.3d 1260, 1264 (D.C. Cir. 1995), quoting, H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229, 239 (1989) (emphasis original). The Supreme Court declared that the latter concept, “continuity,” refers “either to a closed period of repeated conduct, or to past conduct that by its nature projects into the future with a threat of repetition.” Edmonson & Gallagher, 48 F.3d at 1264, quoting, H.J. Inc., 492 U.S. at 241. The predicate act can be neither isolated events nor sporadic activity. H.J. Inc., 492 U.S. at 237-39.

This Court has noted that continuity is “primarily a temporal concept.” Pyramid Securities, Ltd. v. International Bank, 726 F. Supp. 1377, 1383 (D.D.C. 1989), aff’d, 924 F.2d 1114 (D.C. Cir. 1991), cert. denied, ___ U.S. ___, 112 S.Ct. 85, 116 L.Ed.2d 57 (1991). While there is no clear rule defining a substantial period of time, the case law leaves little doubt that a four-year period of time is sufficient. Edison Electric Institute v. Henwood, 832 F. Supp. 413, 417 (D.D.C. 1993) (citing examples). In addition to the length of the period of time, other factors that may be relevant to the continuity issue include the number and variety of predicate acts, the number of victims, and the occurrences of distinct injuries, among others. Id. at 417-18.

In Edison Electric Institute, the plaintiff brought a RICO claim against a supplier alleging that the supplier had bribed and/or paid kickbacks to one of its employees in exchange for making purchases from the supplier or businesses associated with the supplier. The plaintiff identified thirty-three (33) fraudulent invoices that it had paid over a four (4) year period as a result of the bribery and kickback scheme. Edison Electric Institute, 832 F. Supp. at 418. The Court found that the plaintiff’s allegations satisfied “closed-ended” continuity, and, because “the allegations of defendants’ organized and ongoing patterns of dealings with the plaintiff suggest[ed] that the acts were part of their ‘regular way of doing business’” with the plaintiff, satisfied “open-ended” continuity as well. Id.

Plaintiffs’ Amended Complaint clearly alleges predicate acts that are both related and demonstrate the requisite “continuity” to constitute a “pattern of racketeering activity.” Even if the (10) additional payments between August 1998 and December 31, 1999 set forth above are not considered, the Amended Complaint identifies thirty (30) separate payments by Schwartz to the DNC, DSCC, DCCC or organizations affiliated with the Democrats, and at least seven (7) instances of Loral receiving taxpayer-financed government services and/or favorable treatment from the United States Government. Moreover, these payments-in-exchange-for-campaign-contributions occurred continuously over a four (4) year period of time, again not including the newly-identified payments in 1998 and 1999. They clearly were neither isolated nor sporadic.

In addition, each of the thirty (30) payments and each of the seven (7) taxpayer-financed services and/or favors caused a separate injury. See Edison Electric Institute, 832 F. Supp. at 418, citing, Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406 (3d Cir. 1991), cert. denied. ___ U.S. ___, 111 S.Ct. 2839, 115 L.Ed.2d 1007 (1991).

Moreover, there were several victims of the unlawful bribery scheme. When Schwartz received a seat on the U.S. Department of Commerce trade mission to China, anyone who wanted to participate on the trade mission, but was not selected because they had not made the requisite $100,000 contribution to the DNC, became a victim of the scheme. Loral is also a victim, because it was Loral whose good name, reputation and business interest were harmed, and because, on information and belief, Loral’s funds, laundered through the $36 million bonus Schwartz paid to himself, were used to make the payments to the DNC, DSCC, DCCC and other organizations affiliated with the Democratic Party. The United States Government and the American people also are obvious victims of this scheme. Not only has our political process and system of government been perverted and subverted by this unlawful bribery scheme, but U.S. national security have been harmed because of the unlawful transfer of highly sensitive, missile technology to the Chinese that resulted from the scheme. Also because of the scheme, this harm has been left unredressed. Finally, as Schwartz’ recent payments to the DNC, DSCC, DCCC and organizations affiliated with the Democrats demonstrate, there is a very real a threat of continued criminal activity. In fact, Schwartz’ recent contributions to Mrs. Clinton’s U.S. Senate bid suggest that bribery has become a “regular way of doing business” for Schwartz and Loral. Clearly, Plaintiffs have satisfied both “closed-ended” and “open-ended” continuity.

By contrast, the facts of Edmonson & Gallagher, upon which the President and Mrs. Clinton rely, are clearly inapposite. In Edmonson & Gallagher, the plaintiff, a developer who sought to purchase an apartment building, alleged that a tenants association had tried to prevent the purchase through a pattern of racketeering activity. The Court found that the developer could not satisfy either “closed-ended” or “open-ended” continuity because the alleged predicate acts demonstrated only a single scheme to cause a single injury that took place over a very discrete period of time, from December 1986-January 1987 and again in the fall of 1988, and contained nothing that suggested any reason to expect that the defendants would again engage in RICO-violating conduct. Edmonson & Gallagher, 48 F.3d at 1264-65. Clearly, the facts of Edmonson & Gallagher have no bearing here. The President and Mrs. Clinton’s claim that Plaintiffs have not plead the requisite pattern of racketeering activity must be rejected.

B. Plaintiffs’ Amended Complaint Seeks Injunctive Relief Against the President.

In Nixon v. Fitzgerald, 457 U.S. 731 (1982), the U.S. Supreme Court held that the President of the United States is immune from liability for civil damages arising from his official acts.

It is clear, however, that the Supreme Court found the President immune from liability for civil damages only. (4) It did not hold that the President was immune from civil suits generally, or from civil suits that seek injunctive relief against him. The Court declared:

This case now presents the claim that the President of the United States is shielded by absolute immunity from civil damages liability. . . . Here a former President asserts his immunity from civil damages claims of two kinds. . . .Applying the principles of our cases to claims of this kind, we hold that petitioner, as a former President of the United States, is entitled to absolute immunity from damages liability predicated on his official acts.

Nixon, 457 U.S. at 748-49 (emphasis added). In fact, the President and Mrs. Clinton themselves only claim that the President is immune from liability for civil damages. There is nothing that prevents Plaintiffs from pursuing an action for injunctive relief against the President. Such a claim is entirely proper, and the President’s and Mrs. Clinton’s motion to dismiss must be denied in this respect as well.

IV. Conclusion.

For the foregoing substantial reasons, and for the substantial reasons set forth in Plaintiffs’ oppositions to all of the Defendants’ motions to dismiss, the President and Mrs. Clinton’s motion to dismiss must be denied.

Respectfully submitted,

JUDICIAL WATCH, INC.

_____________________________

Larry Klayman, Esq.

D.C. Bar No. 334581

______________________________

Paul J. Orfanedes, Esq.

D.C. Bar No. 429716

Suite 725

501 School Street, S.W.

Washington, DC 20024

(202) 646-5172

Attorneys for Plaintiffs

CERTIFICATE OF SERVICE

I hereby certify that on January 26, 2000 a true and correct copy of the foregoing PLAINTIFFS’ OPPOSITION TO THE PRESIDENT AND MRS. CLINTON’S MOTION TO DISMISS was served, via first class U.S. mail, postage prepaid, on the following:

Attorneys for Defendant Bernard L. Schwartz:

John J. Halloran, Esq.

SPEISER KRAUSE

2 Grand Central Tower

34th Floor

140 East 45th Street

New York, NY 10017

Elkan Abramowitz, Esq.

Richard D. Weinberg, Esq.

MORVILLO, ABRAMOWITZ, GRAND,

IASON & SILVERBERG, P.C.

565 Fifth Avenue

New York, NY 10017

Attorneys for Defendant Loral Space and Communications Ltd.:

Richard L. Posen, Esq.

David P. Murray, Esq.

Jeanne Luboja, Esq.

WILLKIE FARR & GALLAGHER

787 Seventh Avenue

New York, New York 10019-6099

Theodore C. Whitehouse, Esq.

WILLKIE FARR & GALLAGHER

Three Lafayette Center

1155 21st Street, N.W.

Washington, DC 20036-3384

Attorneys for Defendant Democratic National Committee:

Joseph E. Sandler, Esq.

SANDLER & REIF, P.C.

6 E Street, S.E.

Washington, DC 20003

Attorneys for Defendants Democratic Senatorial Campaign Committee

and Democratic Congressional Campaign Committee:

Robert F. Bauer, Esq.

Marc E. Elias, Esq

Andrea Anderson, Esq.

Brian G. Svoboda, Esq.

PERKINS COIE, LLP

607 Fourteenth Street, N.W.

Washington, DC 20005-2011

Attorneys for Defendants Albert Gore, Sandy Berger, Alexis Herman,

Harold Ickes and Melissa Moss:

Mary Hampton Mason, Esq.

Trial Attorney

Torts Branch, Civil Division

P.O. Box 7146

Ben Franklin Station

Washington, DC 20044-7146

Attorneys for Defendants William Jefferson Clinton and Hillary Rodham

Clinton:

David E. Kendall, Esq.

Nicole K. Seligman, Esq.

Julie C. Hilden, Esq.

WILLIAMS & CONNOLLY

725 12th Street, N.W.

Washington, DC 20005

Attorneys for Defendant Melissa Moss (co-counsel):

Stuart M. Gerson, Esq.

EPSTEIN, BECKER & GREEN, P.C.

Suite 700

1227 25th Street, N.W.

Washington, DC 20037-1156

Attorneys for Defendant Marvin Rosen:

Steven M. Salky, Esq.

Hillary A. Davidson,.Esq.

ZUCKERMAN, SPAEDER, GOLDSTEIN,

TAYLOR & KOLKER, L.L.P.

1201 Connecticut Avenue, N.W.

Washington, DC 20036

Attorneys for Terrence R. McAuliffe:

Richard Ben-Veniste, Esq.

WEIL, GOTSHAL & MANGES, LLP

Suite 700

1615 L Street, N.W.

Washington, DC 20036-5610

Attorneys for Defendant John Huang:

John C. Keeney, Jr., Esq.

Ty Cobb, Esq.

HOGAN & HARTSON, LLP

555 l3th Street, N.W.

Washington, DC 20004-1109

__________________________

Paul J. Orfanedes

1. The President and Mrs. Clinton also incorporate by reference the arguments raised in the memoranda of law filed by some of the other Defendants in this matter. Rather than reargue these same issues, Plaintiffs also incorporate by reference their oppositions to these memoranda.

2. These payments do not include contributions made by Schwartz to individual candidates nor any contributions by the “Loral Space & Communications Civil Responsibility Fund,” both of which are substantial.

3. Schwartz also enjoyed, and still enjoys, continued access to the President and Mrs. Clinton. On information and belief, in a 1994 memorandum to President Clinton, then Deputy White House Chief of Staff Harold Ickes recommended that President Clinton call Schwartz to solicit contributions from him for a multi-million dollar political advertising campaign. “I have it on good authority that Mr. Schwartz is prepared to do anything he can for the administration,” Ickes reportedly wrote. See Amended Complaint at para. 76. This is likely the same memorandum that is referred to in an FBI “302” investigative report regarding a November 11, 1997 interview President Clinton gave to the FBI about his campaign fundraising activities. According to the 302, the President was shown a September 20, 1994 memorandum from Ickes entitled “Telephone Calls to Vernon Jordan, Senator Jay Rockefeller and Bernard Schwartz for fundraising purposes. See FBI 302, attached as Exhibit 1, at 1-2. In the memo, Ickes asked the President to call Schwartz and to have breakfast with him, presumably for fundraising purposes. Id. Later during the interview, President Clinton admitted that he saw Schwartz “all the time.” Id. at 12. Not coincidentally, according to FEC records, Schwartz and his wife also own a residence in Chappaqua, New York, approximately 4.5 miles from where the Clintons recently purchased a home so that Mrs. Clinton could run for the U.S. Senate in New York.

4. The failure of the recent impeachment action against President Clinton and the lack of congressional oversight in other, related scandals undercuts the Supreme Court’s conclusion in Nixon that the President can be held accountable through means other than lawsuits for civil damages.

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