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Clinton Was Warned Against China Launch

TIMES STAFF WRITER

President Clinton authorized a U.S. aerospace firm to launch a satellite in China earlier this year, despite warnings from the Justice Department that the move would jeopardize an ongoing investigation of the company, headed by a major Democratic donor, according to internal documents released Friday by the White House.

National Security Advisor Samuel R. “Sandy” Berger said in a memo to the president on Feb. 12 that Justice Department officials believed “a jury would not convict” Loral Space and Communications Ltd. if it knew Clinton had approved a waiver for the company. The firm is under investigation for an earlier transfer of technology to China.

At the same time, the materials show that other federal authorities, including at the departments of State and Defense and the White House counsel’s office, concluded that such concerns did not outweigh the benefits of the deal and recommended its approval.

“We believe that the advantages of this project outweigh this risk and that we can effectively rebut criticism of this waiver,” Berger advised the president in the Feb. 12 memo. Clinton’s national security advisors also counseled him that the Loral satellite project “will not contribute to Chinese military capabilities.”

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In recent days, the White House has come under increasing fire for approving transfers of satellite technology to China and for approving Loral’s request earlier this year to attach a civilian, commercial satellite to a Chinese rocket. Bernard Schwartz, chief executive of New York-based Loral, donated more than $600,000 to the Democrats in the 1996 election cycle, making him the party’s single largest contributor for that period.

Earlier this week, House Speaker Newt Gingrich (R-Ga.) created a special panel headed by Rep. Christopher Cox (R-Newport Beach) to look into charges that Clinton approved the technology transfer in response to hefty campaign contributions from aerospace executives. The Senate is planning a parallel investigation.

On Friday, the White House shot back, briefing groups of reporters on some 400 pages of materials that it was turning over to Congress. Officials said that the documents showed that the Loral waiver--a legal requirement imposed after the Tiananmen Square killings--reflected a routine administrative process, unlinked to contributions. And they pointed out that such approvals of transfers of satellite technology date back to the Reagan administration.

Reasons to approve such technology transfers included the need to get more commercial satellites launched because of the rising use of pagers, cellular phones and other technologies and the benefit of further engaging China in a commercial relationship with the United States, officials maintained Friday.

“You can see that this is a very well established policy that has been followed for a decade now,” said one official.

The White House memos show that officials were keenly aware of questions about Loral and allegations about a previous technology transfer to China, which was assisted after a rocket explosion in 1996. A federal grand jury and congressional investigators are examining whether Loral and Hughes Electronics Corp. improperly shared information that enhanced China’s military missile technology.

Loral has acknowledged not telling the State Department before it provided the help but it denies that the information enhanced China’s military technology.

“If Justice is correct on this matter, the proposed waiver might be criticized for letting [Loral] off the hook on criminal charges for its unauthorized assistance to China’s ballistic missile program,” Berger wrote. “We will take the firm position that this waiver does not exonerate or in any way prejudge” Loral and the issue under investigation.

White House counsel Charles F.C. Ruff advised Clinton’s staff secretary that, despite concerns within the criminal division of the Justice Department, law-enforcement officials in effect were prepared to acquiesce in the deal. “The [Justice] department had every opportunity to weigh in against the waiver at the highest levels and elected not to do so,” Ruff wrote.

He suggested that the White House could weigh the concerns on their own and that Berger could weigh the “balancing of our national security and criminal justice interests.”

The newly released material also included notes taken by a National Security Council aide after a reputed conversation with Will Lovell, chief licensing officer at the State Department. “Lovell thinks it’s criminal, likely to be indicted. Knowing and unlawful,” the aide wrote in reference to the allegations against Loral.

Yet, according to the hand-written notes, the State Department official reputedly also expressed concern about killing the waiver, noting that it was “hard to pull plug W/O indictments at least.”

White House officials also sought Friday to answer accusations that there was something improper in Clinton’s March 1996 decision to shift authority over commercial satellite exports from the department of State to Commerce, which is perceived as a more political agency. In a fact sheet for reporters, the administration maintained that the move “did not relax the export controls on commercial satellites” and was consistent with procedures in other nations.

For all that, however, Friday’s outpouring of papers underscored pressures on the White House to approve Loral’s waiver.

“Bernard Schwartz had intended to raise this issue with you at the Blair dinner but missed you in the crowd . . ,” Thomas B. Ross, Loral’s vice president for government relations, wrote Berger on Feb. 13, referring to a state dinner for British Prime Minister Tony Blair. “If a decision is not forthcoming in the next day or so we stand to lose the contract.”

But Berger had already arrived at his favorable recommendation a day before receiving the note, officials said Friday. A few days later, Clinton granted the waiver.


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