- The Washington Times - Tuesday, April 4, 2000

The U.S. ambassador in Beijing recently hosted a meeting of Chinese and U.S. satellite companies, including two firms now under federal investigation on charges of illegally sharing missile data with China.
In addition, a spokesman for one of the companies and a U.S. Embassy spokesman gave conflicting accounts of what was discussed at the meeting.
The March 16 dinner meeting at the diplomatic residence of Ambassador Joseph Prueher included the Chinese government minister in charge of the China Aerospace Science & Technology Corp. (CASC). The state-owned company runs China's missile program and has been linked by congressional investigators to illegal contributions to President Clinton's 1996 re-election campaign.
A China Aerospace-related firm, China Great Wall Industries, is now a target of a federal probe, along with SpaceSystems Loral and Hughes Electronics Corp. on charges the two companies gave sensitive missile technology to the Chinese resulting from a launch failure investigation in 1996.
Loral spokesman Tom Ross, a former White House National Security Council official, said the company sought the Beijing meeting specifically to discuss the suspended export license for Loral's ChinaSat 8, an advanced civilian communications satellite.
"We did it unilaterally," Mr. Ross said. "We asked the ambassador to have a meeting to explain the status of ChinaSat 8, and the ambassador set up a meeting."
Embassy spokesman Bill Palmer said because Loral and Hughes are under investigation, the subject of launching ChinaSat 8 on a Chinese rocket was never discussed. Mr. Palmer, in Beijing, could not immediately offer an explanation for the discrepancy.
The meeting with Mr. Prueher, a former admiral in charge of all U.S. Pacific forces, included representatives of Loral, formerly Loral Space & Communications Ltd., Lockheed Martin, Hughes, CASC, and China Telecommunications Broadcast Satellite Corp., known as ChinaSat.
According to the Defense Intelligence Agency, ChinaSat in January launched the first in a series of military communications satellites for a new command, control, communications and intelligence system that will assist the People's Liberation Army in linking its armed forces in conflict.
The satellite dinner was organized by the ambassador at the request of Loral's chief representative in Asia, William Wright, to discuss the stalled U.S. export license for the Loral-made ChinaSat 8 satellite, according to Mr. Ross, the Loral spokesman.
However, Mr. Palmer said there was no discussion at the dinner of ChinaSat 8.
"The ambassador is well aware of the federal investigations of Hughes and Loral," Mr. Palmer said in a statement to The Washington Times. "As a result, there was no discussion of ChinaSat 8."
Mr. Ross said the meeting's purpose was to focus on the "status of ChinaSat 8" and that Mr. Prueher decided to have a "broader meeting" by inviting more people.
Mr. Palmer said the meeting was legal under the 1980 Foreign Service Act, which allows U.S. ambassadors to promote U.S. exports and trade, he said.
"The ambassador agreed to host the dinner at Loral's request to demonstrate the embassy's support for these three major exporters as well as the U.S. industry and its workers, and to learn more about the business plans of these Chinese companies," Mr. Palmer said, noting that satellite exports produce "millions" of dollars for U.S. companies and thousands of jobs.
Helen Sanders, a spokeswoman for Hughes, had no immediate comment. A Lockheed Martin spokesman also had no comment.
Sen. Robert C. Smith, who briefly held up Mr. Prueher's nomination in November over charges the retired admiral was soft on China, said the satellite meeting is "very disturbing."
"It certainly sounds inappropriate to me to be wining and dining two contractors under federal investigation for providing military secrets to an enemy nation," the New Hampshire Republican said in an interview.
"This is exactly the reason I held him up. … I thought he was a little too cozy with China," Mr. Smith said, noting that he will request a formal explanation from the ambassador about the meeting.
Larry Wortzel, a former military officer who served in China, also said it is inappropriate for the ambassador to be aiding Chinese companies in light of recent congressional reports on China's acquisition of U.S. missile technology.
"The Department of State and Department of Defense have concluded that the unauthorized release of technical information from satellite companies, specifically Hughes and Loral, raises serious national security concerns," Mr. Wortzel said.
As for the ambassador's role in promoting trade, Mr. Wortzel, now with the Heritage Foundation, said: "That's true. But there are national security aspects to trade that seem to have been ignored."
China Aerospace also surfaced during recent congressional investigations into illegal campaign contributions. A Hong Kong representative of China Aerospace, Chinese Lt. Col. Liu Chao-ying, provided $50,000 in cash from the Chinese military to a Clinton aide in exchange for "good things" from the president, according to congressional investigators.
President Clinton waived export restrictions for Loral in February 1998 and let ChinaSat 8 be launched on a Chinese rocket. The launch was suspended after Congress stripped Commerce of satellite licensing authority and placed restrictions on Chinese satellite launches.
Critics have said the presidential waiver undermined the Justice Department's probe. Approving a Loral satellite export while the company was under criminal investigation would have aided the firm in any court defense of the technology transfer charges.
The recent meeting set up by the top U.S. diplomat in China with representatives of two Chinese satellite firms and Loral, Hughes and Lockheed Martin also could be used by the companies in any future court battle, government officials said privately.
Both Loral and Hughes face criminal penalties and economic sanctions if found guilty of improperly providing China with technology that the Pentagon has said helped to improve the reliability of China's space boosters and nuclear missiles. Both companies have denied wrongdoing.
The Justice Department probe of Loral and Hughes Electronics and China Aerospace for the missile technology transfers has been under way for three years.

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