By EDWARD ALDEN and PETER SPIEGEL
Loral, the US satellite company, said yesterday it would pay Dollars 14m to the US State Department to settle a claim that it improperly gave technical information to China that may have aided that country's nuclear missile programme.
Loral also said the Justice Department had ended its investigation of the company and would not pursue any criminal charges.
The fine marks the last chapter in a bitter political battle in Washington in which Republicans alleged that during the Clinton administration the US had turned a blind eye to actions by Loral and other satellite makers that may have threatened national security.
Loral agreed to the fine, which will be spread out over seven years, without admitting or denying the government's charges.
The investigation arose out of the 1996 explosion of a Chinese rocket carrying one of Loral's Intelsat satellites. Loral subsequently took part in a technical investigation of the launch failure, which it inadvertently shared with the Chinese. The US Defence Department found that the technical data given to China may have helped the Chinese improve the accuracy of their military rockets and missiles, which use similar technology. Experts have since questioned whether anything of military value was given to China.
Bernard Schwartz, Loral chief executive, said yesterday the data were mistakenly sent to China by a Loral employee without approval by the US government, and expressed regret. He said the company had since greatly improved its oversight on export controls.
The Loral incident led to a detailed congressional investigation, which concluded alarmingly that China had been stealing an array of US military secrets. It resulted in severe restrictions on US satellite exports imposed in 1999, which have hampered sales of US-made satellites.
The Justice Department had also been investigating a separate incident involving Hughes Electronics, another US satellite maker. Richard Dore, a Hughes spokesman, said yesterday the company had also been informed by Justice that no criminal charges would be filed.
But Hughes lawyers will meet State Department officials this month to discuss their own settlement of the matter and whether a fine will be necessary. "We've contended all along that we followed the government guidelines," said Mr Dore.
Hughes was accused of helping improve Chinese rocket and missile technology while investigating launch failures. The satellite-building unit of Hughes, Hughes Space and Communications, was sold to Boeing in 2000, but Hughes retained liability for the technology transfer investigation.
Lockheed Martin also agreed to pay Dollars 13m in 2000 after a company it acquired was accused of helping a Hong Kong company with ties to the Chinese government.
$14 million would be a drop in the bucket if criminal charges were pursued.