The US State Department has accused two leading US aerospace companies of 123 violations of export laws in connection with the transfer of satellite and rocket data to China during the 1990s.
The Boeing Co and Hughes Electronics Corp, a unit of General Motors, were notified of the accusations last week. The letter outlining the accusations was made public earlier this week by the Office of Defense Trade Controls, the State Department unit that regulates defense-related trade.
The letter provides new details of how US companies competed for Chinese business by offering to transfer aerospace data in connection with launchings of their satellites. The information included responses to inquiries by the Chinese and others about failures of the rockets carrying those satellites.
The US stopped permitting the use of US satellites for Chinese aerospace ventures in 1999. At the time, the former president Bill Clinton's administration had concerns over China's aid to missile programs in North Korea and Pakistan. Since the technology used to launch missiles is similar to that used for civilian rockets and satellites, there are tight curbs on exports of aerospace and satellite equipment and services.
The State Department alleges that the companies violated arms export laws and regulations when they failed to obtain State Department approval before transferring information to Chinese-related entities, some private and some governmental. It included data on rocket failures, guidance systems, telemetry and aerodynamics.
The activities at issue relate to work by Hughes during the 1990s. Boeing was cited because it acquired Hughes Space and Communications, a piece of Hughes, in 2000.
The companies have denied wrongdoing. Company spokesmen were not available to comment yesterday. But the letter indicates that lawyers for the companies assert that the activities in question were lawful because the information that was transferred did not fit the definition of a licensable "defense service" or was constitutionally protected as "speech."
The companies face fines of up to US$500,000 for each count -- over $60 million -- as well as losing the ability to obtain future approval for exports, a major part of their business. In the past, bans on exporting have been of limited scope and duration.
The filing is unusual, officials said, since companies typically negotiate a settlement for lesser amounts with the government. One year ago, Loral Space and Communications agreed to pay US$20 million, a record fine in a case involving one of several satellite issues in the case against Boeing and Hughes. If there is no settlement, the case would go before an administrative law judge.
The letter, the civil equivalent of an indictment, was signed by William Lowell, director of the trade controls unit, who is leaving his job.
Friends of Lowell, who asked not to be identified, said his resignation was related to concerns that his office is being reorganized to make it easier for US defense companies to export sensitive technology.
State Department officials have said that the reorganization was meant to improve the defense trade unit's performance.
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