The president of Boeing Satellite Systems defended his company Thursday, a day after the State Department accused the firm of illegally giving China satellite and rocket technology that could be used for intercontinental missiles.
Boeing Satellite Systems and Hughes Electronics Corp were accused of giving technical data to China following failed Chinese launches of rockets carrying American satellites in 1995 and 1996.
The State Department cited 123 violations of the Arms Control Export Act and the International Traffic in Arms Regulations.
If upheld, the companies could face restrictions on selling technologies overseas and fines of US$500,000 per charge, though it was not clear if each violation would constitute a separate violation.
In a written statement, Boeing Satellite Systems president Randy Brinkley noted the charges relate to events that occurred years before Boeing acquired Hughes Space and Communications, Hughes' satellite business, in October 2000.
"As a condition of the acquisition, Hughes retained responsibility for resolving these China matters and for paying any resulting fines or penalties," Brinkley said. "The Boeing Company places the highest priority on compliance with export-control laws."
Brinkley said that, since acquiring Hughes Space and Communications, Boeing Satellite Systems has spent millions to ensure compliance.
State Department spokesman Richard Boucher acknowledged that Boeing purchased the company from Hughes "after all of this had happened. But they are still the responsible party to respond to these claims about the unit and what it did," he said.
Hughes officials have denied wrongdoing and said discussions with the State Department were continuing. Spokesman Richard Dore said the company complied with the regulations of the Commerce Department, which oversaw technology exports at the time.
Dore also noted that a Justice Department investigation of the two companies and a third, Loral Space & Communications Ltd, did not result in any criminal charges.
Loral reached a civil settlement with the State Department in January, agreeing to pay a US$20 million fine, of which US$6 million would be used to create procedures to ensure it wouldn't violate export rules in the future.
Loral has said that an employee mistakenly sent a report on the 1996 rocket failure to the Chinese.
American companies began using Chinese rockets in the 1980s to launch satellites because of a shortage of US rockets. After several failed launches, insurance companies underwriting them questioned the reliability of the Chinese rockets. Hughes and Loral participated in studies examining possible causes of the failures.
Congressional investigations in the 1990s found that China had gained valuable information on missiles from those reviews.
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