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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.