- The Washington Times - Friday, January 3, 2003

In an extraordinarily rare development, the State Department has charged two major U.S. aerospace companies Hughes Electronics Corp. (a division of General Motors) and Boeing Satellite Systems Inc. with 123 violations of export laws relating to the transfer of sensitive, military-related technology to Communist China. These serious accusations involve highly questionable, clearly self-serving actions taken during the 1990s by Hughes Space and Communications, which was then a division of Hughes Electronics but was acquired by Boeing in 2000. The charges could result in civil penalties totaling $60 million and severe restrictions on technology-exporting opportunities.
Hughes repeatedly failed to obtain State Department authorization to transfer technological assessments relating to the causes of the failure of Chinese rocket launches that carried Hughes satellites. The charging documents accuse Hughes of improperly providing Chinese authorities with information about guidance systems, aerodynamics and telemetry in order to prevent future launch failures. This information, the State Department argues in its 32-page "charging letter," could be applied to China's development of its intercontinental ballistic missiles (ICBMs), which carry nuclear warheads targeted on the United States and its allies.
Loral Space & Communications Ltd., a competing aerospace and satellite company involved in comparable technology transfers, settled with the government a year ago by paying a record fine of $20 million, $6 million of which will finance internal programs to prevent future unauthorized transfers. For their part, Hughes and Boeing strenuously deny doing anything wrong. "[U]nlike Loral, Hughes and Boeing have both failed to recognize the seriousness of their violations," a State Department spokesman said, "and have been unprepared to take steps to resolve the matter or to ensure no recurrence of violations in the future."
Interestingly, the State Department charges mirror the unanimous, bipartisan findings released in 1999 by the Select Committee on U.S. National Security and Military/Commercial Concerns with the People's Republic of China (PRC), which was chaired by Rep. Christopher Cox, California Republican. Like the State Department, the Cox committee concluded that the "launch failure reviews were conducted [by Hughes and Loral] without required Department of State export licenses and communicated technical information to the PRC in violation of the International Traffic in Arms Regulations." In 1997, a classified Pentagon report had concluded that "national security has been harmed" by such reviews.
Hughes and Boeing claim that much of the information transferred to the PRC did not meet the conditions of a licensable "defense service." In other cases, their lawyers are asserting, according to the State Department, that the U.S. Constitution protected such information transfers as "speech."
Hughes's belated efforts to claim constitutional protection don't jibe very well with its actions during the 1990s. Particularly galling was Hughes's intentional failure in 1996 to inform the U.S. government that the "translator" it wanted to hire (and for which it needed government approval) was the son of a Chinese general, whom Hughes had described in an internal memo as "the most important Chinese space official." As Hughes surely knew, nepotism is so rampant throughout the pervasively corrupt Chinese Communist Party that such children are universally known as "princelings."
This "translator" eventually provided Hughes with detailed inside information about the bid by Lockheed Martin (a Hughes competitor) for the same $600 million contract. In further pursuit of that contract which Hughes won, but which the State Department later nixed after learning that Hughes had hired the "princeling" the innocence-protesting Hughes secretly paid $3 million to a Macao firm controlled by an executive who was involved in building telecommunications networks for the People's Liberation Army.
How desperate was Hughes to crack the Chinese market? "It's time for Hughes to either 'put up or shut up' in regard to meeting their previously stated commitment of transferring technology to China," an internal company memo argued in May 1995, four months after the explosion of a Long March rocket. "If we want to win [a particular contract in China], Hughes must make a real commitment to transferring technology to China." According to the Clinton Pentagon, the Bush State Department and a unanimous, bipartisan House select committee, Hughes, like Loral, went way beyond what the law allowed, jeopardizing U.S. national security in the process.



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