Li Ka-Shing's ties to the Chinese army has Global Crossing shareholders and Congress crying foul.
In February Li, a Chinese billionaire, put together a $750 million offer to buy out the bankrupt telecom giant Global Crossing. However, the plan by the close associate of Chinese President Jiang Zemin has come under fire from inside Congress and from Global Crossing's creditors.
Li faces competitive bids for Global Crossing made by AT&T and New York-based KAB Group LLC, which has filed an alternative plan on behalf of the shareholders that proposes to raise $5.5 billion over the next three years.
However, the financial competition over Global Crossing is now being overshadowed by the U.S. national security concerns posed by the sale to the Chinese billionaire.
Rep. Dana Rohrabacher, R-Calif., sent an urgent letter Monday to Defense Secretary Donald Rumsfeld, expressing his opposition to the proposed sale of the telecom giant to Li and seeking a "full investigation" by the Defense Department into the sale.
'National Security Nightmare'
The concern is that Global Crossing holds contracts over secure Defense Department communications and that the sale to the Chinese billionaire may compromise the U.S. military. Rep. Rohrabacher expressed his concern directly to Rumsfeld, noting that a U.S. military contract "under a company owned by Li Ka-Shing would be a national security nightmare."
NewsMax.com has uncovered the documented close ties between Li and the Chinese military. One source on Capitol Hill compared Li's relationship to the Chinese army as similar to that of billionaire Howard Hughes and the CIA. The fact is that Li is directly in business with the Chinese military.
He is a founder and board member of China International Trust and Investment Corp., or CITIC. A 1997 Rand Corp. report noted that CITIC acts as a front for the People's Liberation Army.
"CITIC does enter into business partnerships with and provide logistical assistance to PLA and defense-industrial companies," noted the 1997 Rand report.
"Poly Technologies, Ltd., was founded in 1984, ostensibly as a subsidiary of CITIC, although it was later exposed to be the primary commercial arm of the PLA General Staff Department's Equipment Sub-Department. Throughout the 1980s, Poly sold hundreds of millions of dollars of largely surplus arms around the world, exporting to customers in Thailand, Burma, Iran, Pakistan, and the United States," states the Rand report.
Editor's note: Here is the text of Rep. Dana Rohrabacher's letter to Defense Secretary Donald Rumsfeld.
March 4, 2002
The Honorable Donald H. Rumsfeld
Secretary of Defense
1000 Defense Pentagon
Washington, D.C. 20301
Dear Mr. Secretary:
I am writing to call your attention and express my opposition to the potential sale of the U.S. telecommunication company Global Crossing Ltd. to a consortium headed by the Hong Kong Chinese Hutchison Whampoa Ltd. American intelligence agencies have found that Hutchison Whampoa's chairman Li Ka-shing has extensive ties to the Chinese Communist leadership and is a founder and Board member of China International Trust and Investment Corporation, which serves as a funding umbrella for the Chinese military. In addition, Li is reported to have been a close friend of General Ji Shengde, the former director of the PLA's military intelligence bureau [See attached official and press documents].
Li, who is one of Beijing's chief conduits in Hong Kong, has been involved in an anti-trust controversy in Hong Kong and widely-documented corruption in obtaining the lease of the strategic ports on the Panama Canal. Worldwide, Li and Hutchison have been involved in business practices that challenge American economic interests. Chinese military doctrine stresses information warfare and sabotage of communications systems as a key to successful assymetrical warfare against the United States. I request that the Department of Defense do a stringent review of this sale based on Li Ka-shing and Hutchison Whampoa's relationship to the People's Republic of China and on the national security ramifications for the United States.
According to the Global Crossing's literature, the company provides integrated telecommunications services over the world's most extensive global IP-based fiber-optic network. By mid-2001, the Global Crossing fiber-optic network covered 10,000 miles, reaching 27 countries throughout the Americas, Europe and the Asia-Pacific regions. Its Asian services are provided through its subsidiary, Asia Global Crossing. These networks are estimated to control over 15 percent of the fiber-optic network connecting the U.S. with Europe; 23 percent of the network with Asia, and 25 percent with South America.
Most significantly, the Global Crossing companies' clients include the U.S. military, the Department of State and other U.S. government agencies. In addition, the U.S. military and other U.S. agencies, as well as NATO use the companies' fiber-optic cables to conduct communications. In July, 2001, Global Crossing won a services contract from the Department of Defense to provide an advanced wide area network Internet service to the Defense Research and Engineering Network [DREN], which links more than 6,000 scientists and engineers at defense laboratories, test centers, universities and industry sites. DREN has also been reported to potentially link every major U.S. military command, and would potentially risk the security of all "gatekeepers" of major U.S. national security communications networks. The DREN contract was recently reopened for bidding because of Global Crossing's shortcomings. However, in the February 14, 2002, New York Times, Ms. Mary Moore, the spokeswoman for Global Crossing, said, "We think we are still in the running for this award." Needless to say, that contract under a company owned by Li Ka-shing would be a national security nightmare.
The purchase of Global Crossing would enable Mr. Li, who has previously faced monopoly-related charges in Hong Kong, of manipulating the international market. And the ownership of Global Crossing would enable Hutchison and the Chinese to gain valuable insight and access to developments in the industry that could hinder competitiveness and cutting-edge leadership of U.S. companies in the international market. Above all other issues, I must underscore that a thorough investigation of this proposed sale is of utmost importance for U.S. national security.
I look forward to hearing from you to discuss a full investigation by the Department of Defense as soon as possible. In addition, I would like a copy, in classified and unclassified form, of a study written by SOUTHCOM during the period when Gen. Wesley Clark was the CINC, related to strategic threats to the United States in Latin America, including Hutchison control of the Panama Canal. The contact person in my Washington office, who is conducting a preliminary Congressional investigation on this matter, is Mr. Al Santoli. Please contact me through Mr. Santoli at 202-225-2415. Thank you for your consideration of this vital matter.
Sincerely,
Dana Rohrabacher
Member of Congress
cc: Hon. Condoleezza Rice, National Security Council
As I am sure you recall, Poly was selling illegally to gangs in LA and elsewhere. They were caught and fined, but so what?