- The Washington Times - Thursday, April 6, 2000

The State Department has charged Lockheed Martin Corp. with illegally helping China develop satellite rocket technology that could be useful in launching multiple-warhead missiles.

State Department spokesman James Rubin said Lockheed Martin exported weapons data without proper authorization in 1994.

"The company made no effort to retrieve the exported information nor did it inform the U.S. government of the export prior to the disclosure of the facts through a Customs Service investigation," he said.

Mr. Rubin said civil action is being pursued "based on the facts of the case and the gravity of the charges."

"In our view, any assistance to Chinese technical capabilities in space launch has the potential to be applied to missile development," he said.

An administration official said the kick-motor technology is covered by the 29-nation Missile Technology Control Regime, which restricts missile-related exports.

A list of 30 violations of the Arms Export Control Act and International Traffic in Arms Regulations was contained in a letter sent Tuesday to the Bethesda, Md.-based aerospace corporation.

The charges state that in 1994 the company provided a report to a Hong Kong satellite company linked to two state-run Chinese firms. The technical assessment explained how to fix problems with a Chinese-made solid-fuel rocket motor used to position satellites in orbit.

"The Department of State charges that Lockheed Martin Corp., formerly Martin Marietta Astro Space, has violated the Arms Export Control Act and the International Traffic in Arms regulations …," the department said in a six-page letter signed by William J. Lowell, director of the department's office of defense-trade controls. It said there were 30 violations.

If found guilty of the charges during administrative procedures over the next 30 days, Lockheed could be fined as much as $15 million and could lose its government contracting rights.

Lockheed Martin is the largest U.S. defense contractor with total annual revenue of about $25.5 billion.

The latest charges are the third case involving U.S. satellite makers suspected of providing missile-related know-how to China. The Clinton administration loosened controls on satellite exports beginning in 1993 under pressure from high-technology manufacturers.

The letter said the U.S. government could take civil or criminal action. However, a Lockheed Martin official said the Justice Department reviewed the matter and decided against prosecution.

The letter stated that after Chinese-made satellite "expendable perigee kick motors," or EPKMs, had several failures in ground tests, "Lockheed Martin offered to provide whatever assistance it could to China Great Wall Industries Co. in evaluating" problems with the solid rocket motor for the space carrier that is used to move satellites into orbit.

"However, Lockheed Martin Corp. had no contractual obligation to be involved in any fashion with the [solid rocket motor] except for the interface of the motor with the satellite," the letter said.

Great Wall Industries is China's state-run missile manufacturer that has been subject to U.S. economic sanctions in the 1990s for selling M-11 missiles to Pakistan.

The report identified another Chinese company, Hexi Chemical and Machinery Co., that along with China Great Wall Industries were partners with Asia Satellite Telecommunications Co. Ltd., or AsiaSat, based in Hong Kong.

Lockheed spokesman Jim Fetig said the company did nothing wrong and the charges are the result of a misunderstanding about export licensing. The company believes it acted properly under two licenses for the satellite cooperation, one from the Commerce Department and a second from the State Department.

"We believe the actions taken in 1994 were reasonable and consistent with the Department of Commerce license," Mr. Fetig said. "This is a dispute over interpretation of that license and the State Department license. National security was not harmed and no technology was exported to the PRC."

AsiaSat was a Lockheed customer and planned to use the Chinese kick motors to position its AsiaSat-2 satellite after launch on a Chinese Long March rocket booster in 1995.

The State Department charged that the 50-page assessment provided to AsiaSat required an additional State Department license. After the company submitted the report to the Pentagon for review, all but five pages of it would have been barred from export to AsiaSat on national security grounds, the letter said.

The Justice Department has been conducting a three-year investigation of Space Systems Loral and Hughes for possibly improperly providing China with missile technology.

Details of the State Department case against Lockheed also followed a meeting in Beijing last month between representatives for U.S. and Chinese satellite and missile companies, including Loral, Hughes and Lockheed.

According to the State Department letter, in September 1994 Lockheed specialists traveled to China and analyzed Chinese test data on the solid-rocket motor failures. They then put together a detailed assessment of the problems.

"The assessment provided analysis and comparison of U.S.-designed [solid-rocket motors] to the EPKM Solid Rocket Motor," the letter said.

The letter stated that a Chinese government firm, China International Trust and Development, is a majority shareholder in AsiaSat. However, a Lockheed official said the Beijing firm is a one-third shareholder.

Henry Sokolski, a former Pentagon official, said the solid-rocket technology could have helped the Chinese develop multiple independently targetable re-entry vehicles used to guide clusters of nuclear warheads launched on a single missile.

China is believed to have multiple warhead capabilities but not the ability to independently target them, Mr. Sokolski said.

"Kick motors are terribly important in positioning a bus to its final position and are interchangeable with the technology used for pointing warheads to precise points on the ground," Mr. Sokolski said.

"That's the reason the technology is controlled," he said. "If this stuff didn't have any military value, it wouldn't be licensed."

The State Department said Lockheed failed to notify the government of its meetings in China on the test firings, violated its munitions license by providing assistance to China Great Wall Industries and sending copies of the solid-rocket motor assessment to AsiaSat.

The company also was charged with unlawfully exporting five documents containing technical data that required a license, and improperly provided "defense services" related to testing and evaluation, hardware design and manufacturing, and "anomaly analysis."

Other charges outlined in the letter said the company failed to reveal the unauthorized exports in license applications to the State Department.

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