US: Boeing, Hughes Helped China Illegally

WASHINGTON (Reuters) - The State Department said on Wednesday it had charged Hughes Electronics Corp. and Boeing Co.'s Satellite Systems unit with illegally sharing sensitive space technology with China in the 1990s that may have helped Beijing fine-tune its missiles.

The companies, which have long denied any wrongdoing in the case, were formally charged on Thursday with 123 violations of the Arms Export Control Act and the International Traffic in Arms Regulations, said Lou Fintor, a department spokesman.

He said he did not know whether the 123 violations applied to each of the companies or represented a combined total.

Boeing and Hughes faced fines of up to $500,000 per charge and possible bars to getting U.S. export licenses if found guilty of the charges by a federal administrative judge and later, by a top State Department official, Fintor said.

Spokesmen for the companies did not return phone calls about the case, which began with a series of failed space launches in China starting in January 1995.

But the Washington Post, the first to report on the charges, quoted Robert Marsocci, a Hughes Electronics spokesman, as saying: "We're in negotiations with the State Department, and we'll be reviewing our options."

The State Department laid out its allegations in a Dec. 26 "charging letter" that was filed without public notice in the department's public reading room. The reading room was closed on New Year's Day.

Hughes officials are alleged to have given China detailed information about rocketry to help them figure out why their rockets were failing soon after launch.

Loral Space & Communications Ltd. announced last January that it agreed to pay $14 million in fines to settle charges that it had provided sensitive data to China after a Chinese rocket carrying a Loral satellite blew up in 1996.

Loral neither admitted nor denied wrongdoing but agreed to pay $14 million in civil fines and spend $6 million over seven years to improve its compliance procedures.

"The department has had several rounds of discussion with Hughes and Boeing to explore a resolution similar to the one with Loral," Fintor said.

"We can note, however, that unlike Loral, Hughes and Boeing have both failed to recognize the seriousness of the violations and have been unprepared to take steps to resolve the matter, and to ensure no recurrence of violations in the future," he said.

Boeing is the top U.S. exporter and the third-biggest U.S. defense contractor after Lockheed Martin Corp. and Northrop Grumman Corp.

In 2000, Boeing bought Hughes Electronics' satellite operations, the outfit alleged to have committed the arms-export violations with China. Hughes Electronics, the old parent corporation, now describes itself as the world's leading provider of digital television entertainment.

From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
January 2, 2001 and January 28, 2002]
[CITE: 18USC2385]

TITLE 18--CRIMES AND CRIMINAL PROCEDURE

PART I--CRIMES

CHAPTER 115--TREASON, SEDITION, AND SUBVERSIVE ACTIVITIES

Sec. 2385. Advocating overthrow of Government

Whoever knowingly or willfully advocates, abets, advises, or teaches
the duty, necessity, desirability, or propriety of overthrowing or
destroying the government of the United States or the government of any
State, Territory, District or Possession thereof, or the government of
any political subdivision therein, by force or violence, or by the
assassination of any officer of any such government; or
Whoever, with intent to cause the overthrow or destruction of any
such government, prints, publishes, edits, issues, circulates, sells,
distributes, or publicly displays any written or printed matter
advocating, advising, or teaching the duty, necessity, desirability, or
propriety of overthrowing or destroying any government in the United
States by force or violence, or attempts to do so; or
Whoever organizes or helps or attempts to organize any society,
group, or assembly of persons who teach, advocate, or encourage the
overthrow or destruction of any such government by force or violence; or
becomes or is a member of, or affiliates with, any such society, group,
or assembly of persons, knowing the purposes thereof--
Shall be fined under this title or imprisoned not more than twenty
years, or both, and shall be ineligible for employment by the United
States or any department or agency thereof, for the five years next
following his conviction.
If two or more persons conspire to commit any offense named in this
section, each shall be fined under this title or imprisoned not more
than twenty years, or both, and shall be ineligible for employment by
the United States or any department or agency thereof, for the five
years next following his conviction.
As used in this section, the terms ``organizes'' and ``organize'',
with respect to any society, group, or assembly of persons, include the
recruiting of new members, the forming of new units, and the regrouping
or expansion of existing clubs, classes, and other units of such
society, group, or assembly of persons.

Report CIA Sat On Cable Alleging Chinese Bribes

Thursday December 24 2:41 AM ET

Report CIA Sat On Cable Alleging Chinese Bribes

NEW YORK (Reuters) - CIA officers in China said in a secret cable sent to headquarters in March 1996 that a consultant to American aerospace companies tried to bribe Chinese officials to gain lucrative contracts, two U.S. newspapers reported Thursday.

Both The New York Times and the Wall Street Journal reported that the CIA failed to turn the cable over to the Justice Department promptly. The CIA told the newspapers the failure to pass the cable on to the Justice Department was an oversight being reviewed by the CIA's inspector general.

The cable surfaced this year after congressional committees began examining whether the Clinton administration had compromised national security in its zeal to promote high technology exports to China, officials told the Times.

U.S. law bars companies or individuals from paying bribes overseas to secure contracts. The CIA is sharing information about potential criminal activity with the Justice Department.

The consultant named in the cable was Bansang Lee, a Chinese-American who worked for Hughes Space & Communications, a subsidiary of Hughes Electronics Corp. and Loral Space & Communications Ltd., the Times said. Hughes Electronics is a unit of General Motors Corp.

The Wall Street Journal reported that Lee was questioned twice in recent months by investigators looking into allegations that Loral and Hughes gave China assistance and data to improve its rockets.

The Times said it is not clear whether the cable specified on whose behalf Lee would have been making any payments to Chinese officials, or what kind of officials these were. Nor was it clear whose money the CIA believed it was, or how much money passed hands, the newspaper reported.

Lee's lawyer, Brian O'Neill, told the Times his client ``has never made any unlawful or improper payments of any kind to any Chinese official.''

Spokesmen for Hughes and Loral deny any wrongdoing but declined to discuss Lee's activities with the Times.

CNN also has the story on their website. They noted:

The Post also reported that the Justice Department had conducted a criminal investigation of the two companies and a third, Loral Space & Communications Ltd., but decided not to file charges. Loral reached a civil settlement with the State Department in January, agreeing to pay a $20 million fine, of which $6 million would be used to create procedures to insure it wouldn't violate export regulations in the future.

http://www.cnn.com/2003/TECH/space/01/01/china.technology.ap/

Isn't it interesting how this story was released the day after Christmas and picked up on New Year's Day? Those two days were probably better than a Friday...

I would also note that it's interesting that this is coming out at a time when N. Korea is making so much noise. I wonder how much has been passed on to whom?

BTW, just for the record, if these guys can't be shot for treason, I think they should at least spend the rest of their lives behind bars. May they live long enough to see all they thought they had gained vanish before their eyes.

ESTABLISHING THE SELECT COMMITTEE ON U.S. NATIONAL SECURITY AND MILITARY/COMMERCIAL CONCERNS WITH THE PEOPLE'S REPUBLIC OF CHINA (House of Representatives - June 18, 1998)

As CEO of Loral Space and Satellites, the 71-year-old Schwartz is a leader in the world of satellite communications, with significant holdings in satellite manufacturing (Loral), broadcasting (Britain's Skynet and Mexico's Satmex), Internet linkage (Orion Network Systems) and global personal communications (Globalstar). His personal wealth is measured in the hundreds of millions of dollars, much of it coming from his sale in April 1996 of Loral's defense business.

As important, Schwartz is a friend of the president. In December 1996 alone, he celebrated his birthday with an intimate dinner with President Bill Clinton and Hillary Rodham Clinton at the White House, was their guest at the Kennedy Center honors and shared a podium with Clinton at the Democratic Leadership Conference, the spawning ground for the Clinton revolution.

In March 1996, according to White House records, he got a perk that few others have recieved--dinner and a movie in the White House theater, along with a cast of celebrities to share popcorn: singer Billy Joel, baseball great Hank Aaron, actress Jennifer Jason Leigh, directors Ethan and Joel Coen, comedian Al Franken and political strategist Dick Morris.

All together, Schwartz was invited to 21 White House events during Clinton's first term.

And why not? Bernie Schwartz is the single biggest contributor to the Democratic Party in the Clinton era. A review of campaign finance databases by NBC News and the Center for Responsive Politics shows that between 1992 and 1998. Schwartz gave the Democratic Party $1,131,500 while he, his family, his companies, their political action committees and executives gave another $881,565 to Democratic candidates. Schwartz gave another $217,000 to the Democratic Leadership Conference. Schwartz and Loral gave $367,000 to the Republicans during that same period.

The man Mother Jones magazine called the orbiter of power, Schwartz has increased his contributions to the Democrats year by year. In the 1991-'92 campaign cycle, he gave $12,500; in 1993-'94, $112,000; in 1995-'96, $586,000, and in 1997-'98, $421,000. Schwartz was the single biggest donor in the 1996 and 1998 campaigns.

Schwartz has been dependent on a number of government programs and regulatory processes, including the export of communications satellites. In letters to the late Commerce Secretary Ron Brown in March and May of 1993, Schwartz laid out some of those businesses.

`Loral Corp. is the provider of [weather] satellites for the Department of Commerce's GOES program, `Schwartz wrote, in seeking a meeting with Brown, `In addition, there are other matters that would be of interest to Commerce in which Loral has a significant position, including the auction of radio frequencies and the exporting of highly advanced technical equipment, e.g., satellites and military hardware. Further, Loral is the principle [sic] supplier of satellites for Intelsat.'

When the two men's schedules didn't mesh in March or April, Schwartz wrote Brown again, noting, `We are affect [sic] by a number of general areas overseen by the Commerce Department. The Department's guidance in these areas will be meaningful.' Included in the list was Commerce's role in communications-satellite licensing.

Brown ultimately took Schwartz with him to China on a trade mission in August and September 1994. Schwartz was invited one month after he gave his first big contribution, $100,000, to the Democratic National Committee.

On that trip, Schwartz asked the Department to help set him up with officials of the Chinese military and space organizations.

A Loral spokesman initially said that Schwartz had never `talked business' with administration officials. But when confronted with the letters and other indications of meetings between Schwartz and Brown, the spokesman said any meetings were `routine and proper' and that Schwartz had always acted `scrupulously.'

To the question of whether the contributions were meant to help Loral with the various issues before the government, including satellite launches in China, the spokesman dismissed the idea as `ridiculous' and said there was `never' a time when Schwartz discussed any of this with the president.

May 24, 1998

Schwartz met Clinton at a small political dinner in Manhattan in the spring of 1992. Clinton, then governor of Arkansas, conceded that he knew practically nothing about the defense industry, and the two chatted for about 20 minutes. Later in the evening, another guest asked Clinton a defense-related question, and Schwartz was impressed by how much of their conversation Clinton had absorbed. "His grasp of details, his grasp of the issues was extraordinary," Schwartz recalled.

Mel Levine, a former California congressman who knows both men, said: "Bernard clearly likes Clinton personally. And Clinton has paid a lot of attention to him."

Another prominent Clinton official who paid attention to Schwartz was Brown. In 1994, Schwartz was one of 24 executives on Brown's plane to China.

Two months before the late summer trip, Schwartz wrote a check for $100,000 to the Democratic National Committee. He denied there was any link.

On the plane, Schwartz said he asked Brown if he could arrange a private meeting with Zhu Gao Feng, the vice minister of China's Ministry of Post and Telecommunications. In a meeting with Chinese telecommunications officials, Brown publicly praised Loral's Globalstar cellular telephone system.

Brown did arrange the meeting for Schwartz and another executive at the Chinese telecommunications ministry. "I thought it was terrific -- a real opportunity, what a shot," Schwartz recalled. "It was a big deal. In a place like China, it was important because the next time I went, I was able to say I had met with the minister."

For Bernard Leon Schwartz, Beijing was a long way from Bensonhurst, a neighborhood in Brooklyn where he grew up grateful to the largess of Democrats.

His grandfather was a Tammany Hall functionary who died while campaigning for Democrats. Schwartz's political sensibilities were shaped by the party that sent his family a turkey and two bags of coal every holiday season and the policies of President Roosevelt.

He began his career in New York's financial district. In 1972, he bought Loral, a small Bronx defense contractor on the verge of bankruptcy. Despite no experience in the defense industry and his opposition to the Vietnam War, he relished the challenge.

"There's something about me that wants to grow a big company," he said in an interview in 1975. "I don't deny that. I enjoy the game, and the only way to really enjoy it is to win. I like to win. It's more fun."

Schwartz transformed the $7 million company into a $15.5 billion military behemoth. Although Loral had Pentagon contracts in the Reagan-Bush years, Schwartz remained a loyal Democrat.

After Clinton was sworn into office in 1993, Schwartz cherished his many invitations to the White House. But he cited one perk that eluded him. "I'd give my eye-teeth to stay in the Lincoln Bedroom," he said.

In 1996, Loral's defense business was sold to Lockheed Martin Corp., a transaction that required antitrust approval from the Clinton administration. Schwartz gave half of his $36 million bonus from the merger to Loral employees. Loral's space business is now a separate public company.

That same year, Schwartz gave $606,500 to the Democratic Party. In a 1994 memorandum, the White House deputy chief of staff, Harold Ickes, wrote to Clinton about fund-raising. "I have it on very good authority that Schwartz is prepared to do anything he can for the administration," he wrote.

Two years later, there was something that Schwartz wanted -- the transfer of satellite export approval from the State Department to the Commerce Department.

In the letter he co-signed with the chairmen of Hughes Electronics Corp. and Lockheed Martin Corp., he wrote, "By making possible real 'one stop shopping' for all export authorizations related to commercial communications satellite systems, your decision will greatly enhance the ability of U.S. manufacturers to retain our global competitiveness."

The decision by the president to transfer satellite export approval to the Commerce Department overruled a recommendation by Secretary of State Warren Christopher and caused friction inside the Cabinet over concerns that American security could be compromised.

Hughes is under investigation with Loral for its role in a failed 1996 launching. Hughes also gave campaign contributions, though its donations were more modest and bipartisan.

The 1996 launching attracted the attention of federal investigators after Loral told the government that a report with some technical data had been given to the Chinese as part of the Chinese effort to figure out why the launching failed. Despite these problems, Loral continued its China launchings, each requiring a presidential waiver.

Postponing a launching can be a costly matter, and when Schwartz set out for the Blair dinner in February, he was hoping to prod Berger to give Loral a definite yes or no answer on the launching set for later that month.

Approval was complicated by the fact that the White House knew that the Justice Department was investigating Loral in the aftermath of the failed 1996 launching.

Schwartz missed Berger at the Blair dinner, but Thomas Ross, a Loral vice president, wrote Berger eight days later. "If a decision is not forthcoming in the next day or so, we stand to lose the contract," Ross wrote.

Although documents made available Friday by the White House show that the president was warned that approving the launching could be seen as letting Loral "off the hook on criminal charges for its unauthorized assistance to China's ballistic missile program," later that month a Chinese rocket carrying a Loral satellite took flight.

This article leaves out so much. So much treachery is missing from this I cannot believe it. These CEO's are paying FINES???? Fines for TREASON???? I don't get it. Why aren't they in JAIL? Since when did our nation begin only fining traitors? Are these money driven traitors less guilty than those who would betray our nation via spying? I don't get it. What's 14 million dollar fine to a man who's company rakes in hundreds of millions? He probably doesn't even PAY IT out of his personal coffers.

And what about the clinton's turning over the vetting of this high tech material from our Dept of Defense to the Dept of Commerce under now dead Ron Brown? What about that????

What about the quid pro quos for the DNC, the clinton criminal enterprise everyone is so sick of.... what about the CHINESE CAMPAIGN CASH that flowed via these traitorous deals into the DNC coffers????

This is a most unsatisfying article....as an American citizen who understands exactly what MIRV tech has allowed the Chinese to do-to leap forward by years into the business of controlling their missile weaponry- I DEMAND MORE!

Rant off... < for now :^(.....grrrrrrrrrrrr)

Boeing accused of passing secrets to China

January 2 2003

Two leading aerospace companies have been accused by the US State Department of illegally providing satellite and rocket technology to China that could be used for intercontinental missiles.

The department has accused Hughes Electronics Corp and Boeing Satellite Systems of illegally giving technical data to China following failed Chinese launches of rockets carrying American satellites in 1995 and 1996.

Boeing acquired Hughes' space unit in 2000.

In a letter dated December 26, the department said the companies committed 123 violations of the Arms Control Export Act and the International Traffic in Arms Regulations.

If the violations are upheld through the department's administrative appeals procedures, the companies could face restrictions on selling technologies overseas. They also could face fines of $US500,000 ($A891,000) per charge, though it is not clear if each violation would constitute a separate violation.

"The number and substance of charges reflect the seriousness of the violations," Lou Fintor, a State Department spokesman, said today. "There are many similarities between a space launch vehicle and an intercontinental ballistic missile."

A Hughes spokesman, Richard Dore, said the company did nothing wrong.

"We did not do anything to assist the Chinese," he said.

Dore said the company complied with the regulations of the Commerce Department, which oversaw technology exports at the time. He said discussions with the State Department are continuing.

Dore also noted that a Justice Department investigation of the two companies and a third, Loral Space & Communications Ltd, did not result in any criminal charges.

Boeing spokesman Walt Rice said the company needed to review the State Department's accusations before commenting.

Loral reached a civil settlement with the State Department in January, agreeing to pay a $US20 million ($A35 million) fine, of which $US6 million ($A10 million) would be used to create procedures to ensure it would not violate export rules in the future.

Loral has said that an employee mistakenly sent a report on the 1996 rocket failure to the Chinese.

Fintor said that "unlike Loral, Hughes and Boeing have both failed to recognise the seriousness of the violations and have been unprepared to take steps to resolve the matter".

US companies began using Chinese rockets in the 1980s to launch satellites because of a shortage of US rockets. After several failed launches, insurance companies underwriting them questioned the reliability of the Chinese rockets. Hughes and Loral participated in studies examining possible causes of the failures.

Congressional investigations in the 1990s found that China had gained valuable information on missiles from those reviews.

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