Lockheed Accused of Giving Data on Rockets to China

The State Department has charged Lockheed Martin Corp. with violating the Arms Export Control Act by providing a scientific assessment of a Chinese-made satellite motor to a state-owned Chinese conglomerate.

The State Department’s Office of Defense Trade Controls informed Lockheed Martin of its findings in a letter dated Tuesday and gave the nation’s largest defense contractor 30 days to respond to the civil charges, which could result in a fine of as much as $15 million and bar the Bethesda, Md.-based company from exporting satellites or satellite technology for up to three years.

The allegations are similar to those lodged in 1998 against two other U.S. satellite makers, Hughes Electronics Corp. and Loral Space & Communications, which have been under criminal investigation for possibly passing sensitive data to China.

The Hughes and Loral probes triggered intense controversy in Congress. Republicans charged that the Clinton administration, under the influence of campaign contributions and heavy lobbying, had been lax in its oversight of high-tech exports to China.

Although the Lockheed case does not involve violations of criminal law, State Department spokesman James P. Rubin called it “a serious matter” and said export control officials decided to take action “based on the facts and the gravity of the charges.”

“In our view, any assistance to China that enhances its capabilities in space launch has the potential to be applied to missile development,” Rubin said.

A spokesman for Lockheed Martin, James L. Fetig, denied that the company had violated export laws and said it obtained a Commerce Department license before its scientists assessed the satellite motor.

“National security was not harmed, and it is our understanding that there is no criminal violation involved and no criminal charges pending,” Fetig said.

According to Lockheed, the company sent a team of scientists to China in 1994 at the request of a Hong Kong-based client, Asia Satellite Telecommunications Co., to assess the “kick motor” that AsiaSat planned to use in launching its AsiaSat-2 communications satellite. A kick motor fires after launch to send a satellite into its final orbit.

After Lockheed completed its study, the company forwarded 10 copies of the 50-page document to AsiaSat, which successfully launched the commercial TV and telephone satellite the following year.

AsiaSat is partially owned by China International Trust & Investment Corp., a state-owned conglomerate whose chairman, Wang Jun, attended a 1996 White House coffee for political contributors hosted by President Clinton.

China International Trust is the most influential financial and industrial conglomerate in China, with holdings that include a steel mill in Delaware, forests in Washington state and a meat-processing plant in Australia, as well as one of China’s largest banks and interests in power plants, pharmaceuticals, automobiles and textiles.

Lockheed officials said Wednesday that the company performed the technical assessment under a strict confidentiality agreement with AsiaSat that prohibited dissemination to firms or government entities in China.

Before sending AsiaSat copies of the report, Lockheed said, it also sent its study for review by the Defense Department, where export control officials removed what they considered sensitive information that could have helped China to improve its military rocket capabilities.

Following the Pentagon review, Lockheed said, it shared the edited document with China Great Wall Industries, a state-owned company involved in solid rocket motor development.

In its letter charging Lockheed with 30 separate violations of federal export controls, however, the State Department alleged that Lockheed sent the unedited version to AsiaSat before the Defense Department had blacked out all but five of the 50 pages.

The State Department also said Lockheed did not tell the Pentagon that it had provided 10 unedited copies of the report to AsiaSat until the existence of those reports was recently discovered by the U.S. Customs Service. Lockheed “made no effort to retrieve the 10 unexpurgated assessments or seek to learn the ultimate disposition of these assessments,” the State Department charged.

Even sharing the redacted version of the study with China Great Wall Industries, the State Department said, violated U.S. export regulations, which prohibit any technical assistance “that might enhance [Chinese] space launch vehicles.”

In performing and sharing the study, Lockheed also violated U.S. rules by identifying flaws in Chinese testing procedures, confirming the results of Chinese tests pinpointing faulty insulation, and identifying problems with U.S. solid rocket motor technologies, according to the State Department letter.

In telephone interviews Wednesday, Lockheed officials responded that the central issue in the dispute is the type of kick motor involved. There is no question, they said, that some highly sophisticated kick motors capable of firing multiple times and repositioning satellites once they are in their final orbits are considered defense technologies subject to stringent regulation by the State Department.

But the kick motor used to send AsiaSat-2 into its final orbit was capable of firing only once and was, for export control purposes, a commercial commodity regulated by the Commerce Department, they said.

Given the heightened political sensitivity currently surrounding satellite export to China, they acknowledged, Lockheed never would attempt to perform such a study now without checking with both the State and Defense departments.

But six years ago, they said, Lockheed officials thought they were on safe ground with a Commerce Department license.

In 1994, the Clinton administration transferred regulatory control of satellite exports from the State Department to the export-friendly Commerce Department after strenuous lobbying and heavy political contributions by U.S. satellite makers.

Last year, Congress shifted regulatory control back to the State Department, concluding that the Commerce Department had been too interested in boosting commercial ties to China at the expense of national security.

Lockheed Martin is a major political donor, tending in recent years to favor Republicans. Its political action committee made more than $1 million in donations during the last election, about two-thirds to Republicans. It also gave $187,000 in “soft money” corporate contributions to Republicans and $66,000 to Democrats.