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Read and Learn! As I have said before, this country is been overthrown by those who are owned by the devil with Clinton, John Kerry among others who have sold us out.
All documented with news articles and FOI act papers etc. etc. etc. including a STATE DEPT. CHARGE LETTER TO HUGHES AND BOEING CONCERNING TRANSFER OF DEFENSE TECHNOLOGY TO CHINA
This is what I used to put on radio in Kansas City and why the Communist wife of the owner got terminated because KCXL1140 owner Pete Schartel is a emasculated form of a man who did not have the courage to stand up for God and the Truth concerning what was being done to this country and by who.
Now you know why the Chinese and Russians were able to catch up with us militarily and now are able to and are preparing to take us off the map. Now you know who is responsible.
And most importantly is the timing…because God allowed this in preparation for this His judgment on we the United States of Sodom and Gomorrah who have rejected Jesus Christ. Those involved in this treason…I can assure you have rejected him too and been in the forefront of that rejection in one form or another and they shall burn in hell.
HUGHES FORMER CEO C. MICHAEL ARMSTRONG
Military Technology for Sale
KERRY’S SECRET TIES TO BEIJING
SENATOR WON’T TALK ABOUT SPACE TECH TO CHINA
HUGHES CEO C. MICHAEL ARMSTRONG
DOCUMENTS OBTAINED USING THE FREEDOM OF INFORMATION ACT
SENT BY: HUGHES A/C 3-14-95 ; 1:13PM ;WASHINGTON DC OFFICE 12026475713 WHITE PAPER ON COMMERCIAL COMMUNICATIONS SATELLITES: ISSUES AND ANSWERS Commercial communications satellites have been a powerful force in promoting democratic change round the world. The sale of US-manufactured communications satellites has contributed positively to US balance of payments. The US continues to lead the world in production and sale of commercial communications satellites, but this lead is being threatened not only by foreign competition, but also by unresponsive US export procedures and practices. Statement of the Problem For more than 30 years, the US has led the world in building and exporting commercial communications satellites. It enjoyed a virtual monopoly for many years, and up to the late 1970's, all operating commercial communications satellites were of US manufacture. Competition was an entirely US affair. This situation changed dramatically in the last decade. Japanese, European, and Canadian firms began an aggressive campaign to surpass the US in the sale and manufacture of commercial communications satellites and supporting systems. European firms competed head-to-head with the US satellite industry, closely matching US companies in quality and often bettering them in price. Throughout, European industry enjoyed the aggressive support of their governments. This support was a vital element, for example, in Aerospatiale's Turksat, Thaisat, and Arabsat awards. In their marketing discussions with potential foreign customers, the Europeans consistently promoted the view that the US satellite manufacturers increasingly were uncertain and unreliable suppliers because of the US Government's restrictive export policies. The US commercial communications satellite industry, the USG, and the Congress must act now to reverse this situation and ensure that it does not recur. An appropriate remedy is to complete the transition of commercial (i.e. non-military) communications satellites from the United States Munitions List (USML) which is under State Department jurisdiction to the Commerce Control List (CCL), which is under Commerce Department jurisdiction. This jurisdictional change is appropriate since the national security considerations that initially put communications satellites on the USML are no longer valid; and keeping commercial communications satellites on the USML puts US industry at a competitive disadvantage in the international telecommunications marketplace. A Simple Solution Under current law, many commercial communications satellites are placed on the USML, rather than the CCL, because they have characteristics that in the past were unique to military satellites. Keeping commercial communications satellites on the USML is no longer warranted. The characteristics, listed below, now are routinely employed on commercial communications satellites, many of which are of non-US manufacture: - Anti-jam Capability (ie. antennas and/or antenna systems with the ability to respond to incoming interference by adaptively reducing antenna gain in the direction of the interference). In today's exploding telecommunications environment, many commercial customers wish to ensure the veracity and quality of their signals and protect their systems from spurious commands and interference. This capability meets a legitimate commercial need, and is not unique to military use. - Antennas: (with aperture greater than 30 feet; or with all sidelobes less than or equal to -35dB; or designed. modified, or configured to provide coverage area on the surface of the earth less than 200nm). Commercial mobile services require large aperture antennas with sensitive receivers. Hughes already is employing designs for its geosynchronous mobile satellite systems that include antennas exceeding 30 feet in diameter commercial use. Control of sidelobe levels for today's commercial applications is a major antenna design factor resulting from requirements to control the antenna’s footprint on the earth, satisfy constraints on orbital location, and meet efficient communications payload design criteria. The current and emerging market demand for frequency reuse, antenna spot beams, and the commercial availability of inespensive ground terminals are driving antenna footprints to sizes under 200 nm. This characteristic is no longer a realistic discriminator between military and commercial systems. - Crosslinks (ie. intersatellite data relay communication links that do not involve a ground relay terminal). The use of crosslinks is another example of readily available technology that has led to new commercial applications, such as Motorola's IRIDIUM and Hughes' SPACEWAY. Similar systems are being developed in Europe and Japan and will have wide spread commercial applications. - Baseband Processing (ie. spaceborne baseband processing that uses any technique other than frequency translation and which can be changed several times a day on a cbannel-by-channel basis among previously assigned fixed frequencies). The uses of on-board processing for commercial applicalions are many, particularly for the rapidly-emerging mobile commercial communications marketplace. Its applications range from routine sorting and routing of incoming calls to maintaining compliance with prescribed frequency spectrum management. - Encryption deviecs. Satellites traditionally have been used for the transmission of sensitive financial and business data that require absolute integrity and privacy. The encryption device is a relatively sophisticated equipment item, but is manufactured for commercial use and, in the case of commercial communications satellites, it generally is employed to scramble/unscranibling video and audio programming in order to protect this data. Once it is embedded in the satellite, the enctyption device has no military significance. - Radiation Hardening. Commercial communications satellites daily operate in a natural radiation environment harmful to electronic circuits. Hence, they need protection from the environment in which they operate. This protection comes from radiation hardened devices embedded in the satellite. - Perigee Kick Motors. The perigee kick motor is of a type routinely used to deliver commercial communications satellites to their proper orbital slots. Using foreign manufactured perigee kick motors on US-manufactured satellites might work and alleviate problems associated with the USML, but it would unnecessarily reduce US content and forfeit revenues to foreign competition. The above characteristics arc no longer unique to military satellites. They are becoming increasingly common to fixed and mobile communications systems. Hence, they should no longer serve as the basis for keeping commercial communications satellites on the USML and off the CCL. In real terms, bureaucratic change simply has not kept abreast with technological and economic realities. As a result, many commercial communications satellites remain on the USML, and their export is subject to the USML's many restrictions. Removing commercial communications satellites from the USML and placing them on the CCL largely would rectify this problem. Commerce licenses do not require Congressional approval; they are routinely issued in a more timely fashion; and, relative to State Depanmcnt licenses, their issuance is less frequently delayed by sanctions that may be imposed by the State Department upon customer countries. Moreover, the Department of Commerce sees promotion of exports as one of its prime roles. US Export Policy Discriminates Against the Satellite Industry Cunrent US export policy is applied to commercal communication satellites in a manner inconsistent with other high-tech, high-added-value US exports, such as the Boeing 747. The overall technology content of a Boeing 747-400 is greater than that of any contemporary commercial communications satellite. The 747's inertial reference system and avionics exceed in cost, complexity and sensitivity the satellite’s anti-jam capability, crosslinks, and antennas. Its on-board computers provide capability greater than the satellite's baseband processing. The 747's powerful turbofan engines are more sophisticated than any existing perigee kick motor. Its radars surpass the technology of the satellite's encryption and radiation hardening devices. Nonetheless, the Boeing 747, with its state-of-the-art radar, inertial reference system, fuel management systems, on-board processors, and antennas, is on the CCL. With but few exceptions, it can be exported worldwide on a pre-approved general license. Moreover, the 747 is delivered intact to customers. This is in marked contrast to the delivery of a U.S. manufactured commercial communications satellite which is delivered on orbit and not examined or touched by the customer. Like Boeing and other US aircraft manufacturers, the US satellite industry believes that the new investment by emerging nations in transportation, telecommunications, and power generation could total $1 trillion by the end of the decade. This will help the satellite industry boost exports and create jobs but only if US policy allows it the freedom to effectively compete in the global market. Unnecessary controls adversely affect America's ability to compete. Tight controls stifle our access to new markets. Tight controls also serve to discourage customers from buying US, and ultimately motivate them to accelerate the development of indigenous capabilities, thus giving them the potential to compete with US industry. Conclusion The global arena in which the US satellite industry once reigned supreme has irrevocably changed. Foreign competition is keen and it is abetted by a US export policy that not only discriminates against satellite manufacturers, but also imposes delays that call into question their reliability as suppliers. Moving US manufactured satellites off the TJSML to the CCL will alleviate this problem, .and should contribute directly to the competitiveness and growth of the US satellite indusuy. Recommendation Remove commercial communications satellites and related data from the USML and put them on the CCL! 8 March 1995
STATE DEPT. CHARGE LETTER TO HUGHES AND BOEING CONCERNING TRANSFER OF DEFENSE TECHNOLOGY TO CHINA
CHINESE LONG MARCH & CSS ICBM
United States Department of State Bureau of Political-Military Affairs Office of Defense Trade Controls Washington, D.C 20037 December 26, 2002 Larry D Hunter General Counsel Hughes Electronics Corporation 200 North Sepulveda Boulevard El Segundo, California 90245-0956 Douglas G. Bain Senior Vice President & General Counsel The Boeing Company 100 North Riverside Chicago, Illinois 60606 Re: Investigation of Hughes Electronics Corporation and Boeing satellite Systems (formerly Hughes Space and Communications) Concerning the Long March 2E and Long March BE failure investigations, and other satellite-related matters involving the People's Republic of China Dear Messrs. Hunter and Bain: (1) The Department of State ("Department") charges that HUGHES ELECTRONICS CORPORATION (hereinafter "Respondent HE", which includes Hughes Network Systems, Inc.) and BOEING SATELLITE SYSTEMS (hereinafter "Respondent BSS") formerly HUGHES SPACE AND COMMUNICATIONS ("HSC") (hereinafter, "Respondents" when referred to jointly) violated the Arms Export Control Act ("Act") and the International Traffic in Arms Regulations ("ITAR" or "Regulation" in connection with their misconduct related to the January 1995 failed launch of the Long March 2E rocket carrying the APSTAR II spacecraft1 the February 1996 failed launch of the Long March 3E rocket carrying the INTELSAT 708 spacecraft, and ---------------------------------------------------------------- 1 The Boeing Company purchased Hughes Space and Communications from Hughes Electronics on January 13, 2000 ________________________________________________________________ 2 other matters set forth herein concerning their business activities with China. One hundred twenty-three (123) violations are alleged at this time. The essential facts constituting the alleged violations and the regulatory or other provisions involved are described herein. The Department reserves the right to amend this charging letter (See 22 C.F.R. S 128.3(a)), including through a revision to incorporate additional charges stemming from the same misconduct of the Respondents in these matters. Please be advised that this is a charging letter to impose debarment or civil penalties pursuant to 22 C.F.R. S 128.3. * * * PART I - RELEVANT FACTS Jurisdictional Requirements (2) Respondents HE and BSS are corporations organized under the laws of the State of Delaware. (3) Respondents are -- and were during the period covered by the offenses set forth herein - - engaged in the manufacture and export of defense articles and defense services and so registered with the Department of State, Office of Defense Trade Controls ("ODTC") in accordance with Section 38 of the Act and S 122.1 of the Regulations. (4) Respondents are U.S. persons within the meaning of S 120.15 and, as such, are subject to the jurisdiction of the United States, in particular with regard to the Act and the Regulations. (5) China Academy of Launch Technology ("CALT"), China Great - Wall Industry Corporation ("CGWIC"), China Satellite Launch and Tracking Control ("CLTV"), China Aerospace Corporation ("CASC"), China International Trust & Investment Company ("CITIC"), China United Telecommunications Satellite Company, China Overseas Space Development & Investment Company, Commission for Science, Technology & Industry for National Defense ("COSTIND"), Sino-Canada Telecommunications and Investment Management Company, Ltd, Asia Pacific Satellite Telecommunications Company ("APT" formerly "APSAT"), Asia Pacific Mobile Telecommunications Company ("APMT") Asian Satellite Telecommunications Company, Ltd ("ASIASAT"), Societe Europeene des Satellites ("SES") and ________________________________________________________________ 3 other persons so identified below all are foreign persons within the meaning of S 120.16 of the Regulations. US-PRC International Agreements on Space Launch (6) on December 17, 1988, the United States and the People's Republic of China ("PRC") signed an international agreement in Washington, DC. entitled "Memorandum of Agreement on Satellite Technology safeguards Between the Governments of the United States and the People's Republic of China," which entered into force upon signature. This agreement specifies the security procedures to be followed for launch of U.S.-manufactured satellites from the territory of the PRC and also expressly prohibits U.S. persons from providing "any assistance" to the PRC relating to the design, development, operation, maintenance, modification, or repair of the launch facility or launch vehicle.2 OPTUS B2 (7) On December 21, 1992, a PRC Long March 2E space launch vehicle ("SLV") carrying the OPTUS B2 satellite manufactured by Respondents exploded shortly after liftoff from China’s space launch facility (Xichanq Launch Center). The satellite was exported to the PRC for launch pursuant to a State Department munitions license issued by ODTC, which provided for U.S. Government (i.e., through Department of Defense personnel) monitoring of all phases of the launch ---------------------------------------------------------------- 2 The 1988 Agreement was superceded upon entry into force by a similar U.S.-PRC agreement done at Beijing on February 11, 1993, containing the same prohibition. The agreement also bars the PRC from seeking such assistance and, together with the prohibition on the provision by U.S. persons of such assistance, provides the fundamental conditions sine qua non the United States has licensed the export of commercial satellites to the PRC for launch into outer space. The requirement to comply with these bilateral agreements has been routinely incorporated as a condition of the export license authorizations provided by ODTC to U.S. satellite manufacturers. See para. (7) above. In a letter dated December 3, 2002, Respondent's stated their view that the agreement (rather than reflecting a ban on the provision of assistance by U.S. persons) is more accurately described as reflecting a mutual understanding of the PRC and the USC. ________________________________________________________________ 4 and which required that all of Respondents' employees and agents conform strictly to the aforesaid Satellite Technology Safeguards Agreement, specifically by prohibiting "any .. technical assistance whatsoever to its (Respondents') Chinese counterparts which might assist China to design, develop or enhance the performance of any of its contemplated or existing Long March launch vehicles or missiles." (8) Following the OPTUS B2 failed launch, the Respondents concluded that the PRC's SLV nose cone (or fairing) was a principal cause of the failure and sought advice from ODTC on whether a license would be granted to hold discussions with the PRC on this matter, following which consultation with ODIC the Respondents concluded that "a license request would almost certainly be denied (by ODTC) if even the slightest possibility or inference, real or perceived, remained undispelled (sic) that the technical data could directly or indirectly impact PRC ballistic missile interests."3 In the event, the Respondents decided not to seek a license from ODTC, but did proceed to conduct a launch failure investigation into the causes of the OPTUS B2 SLV failure, which would inform their approach in subsequent matters, described below.4 ---------------------------------------------------------------- 3 April 9, 1993, memorandum from Majors (Hughes Washington Director for International Affairs) to Leedle (Hughes Technology Export Control Coordinator). 4 While there is information available to ODTC indicating that violations of the Act and the Regulations occurred in the OPTUS B2 matter, it has decided not to bring charges owing to the passage of time and contradictory recollections of persons involved in these matters, and the further opinion that the charges detailed herein provide an adequate basis for addressing the underlying patterns of misconduct. The Respondents do not deny their failure to obtain a license, but maintain they obtained approval from a Department of Defense monitor prior to making disclosures to the Chinese. Respondents also assert that the Department "well knows" that their decision not to seek a license "coincided with a decision not to furnish any information that could qualify as technical data or a defense service." However, the Department has no such understanding or knowledge; quite the opposite is true: The Respondents have repeatedly asserted throughout this investigation that none of their conduct in any of the matters touched on in this ________________________________________________________________ 5 APSTAR II (9) On January 26, 1995, a PRC Long March 2E space launch vehicle ("SLV") carrying the APSTAR II satellite exploded shortly after liftoff tram China's space launch facility. The APSTAR IL satellite was also manufactured by the Respondents pursuant to a contract with the Asia-Pacific satellite Telecommunications company ("APT") located in Hong Kong, which was then and remains today "owned or controlled" (as these terms are understood in the Regulations at S 122) by various PRC entities. The APSTAR II satellite had been exported to the PRC launch pursuant to an export license issued by the Department of Commerce. That export license, while not requiring U.S. Government monitoring of the launch or other specific prohibitions on assistance to China's SLV program (unlike the earlier State Department licenses for OPTUS B2 and the first APSTAR satellite), also did not --indeed, lawfully could not -- provide -authorization for Respondents to engage in the unlawful conduct alleged below in violation of the Act and the Regulations.5 ---------------------------------------------------------------- charging letter qualifies as a "defense service" either because it excluded technical data (in their opinion) or because it is Constitutionally protected "speech", while ODTC has repeatedly admonished Respondents and their attorneys that the AECA and ITAR properly regulate on U.S. security and foreign policy grounds the conduct of U.S. persons who aid and abet the space launch and/or intercontinental ballistic missile programs of foreign powers, that Respondents are improperly conflating the laws and regulations governing the conduct of their corporations abroad in respect to foreign space and missile programs with the laws and regulations governing the exercise of "speech" (which are in no manner at issue here) and that, because of security and foreign policy considerations, the United States has long held by the ITAR (with which regulations Respondents are fully familiar) that a defense service requiring approval by ODTC of a technical assistance agreement may occur even when all the information relied on in furnishing the defense service to a foreign power is in the public domain. 5 Hughes initially received approval from the State Department in March 1993 17 or the APSAT (later termed APSTAR) program, which was then defined to cover two series 376 ________________________________________________________________ 6 (10) Following the APSTAR II launch failure, the Respondents, APT, CGWIO and the insurance firm, Johnson & Higgins, signed a memorandum of understanding in which they agreed "to cooperate with each other in a Spirit of mutual benefit and cooperation to prepare information concerning the APSTAR-2 mission failure... Each of the parties will use their best efforts to prepare the necessary information as soon as possible to assist APT’S business operations..- APT, Hughes and OGWIC agree that they will each cooperate and coordinate all investigations of the probable cause of ---------------------------------------------------------------- satellites for APT, Ltd. in Hong Kong. However, in August 1993 the State Department imposed missile sanctions (Category 2) and determined that the export of communications satellites containing Missile Technology Control Regime ("MTCR") Category 2 items to the sanctioned Chinese entities was prohibited and suspended access to any MTCR related technology by PRC nationals. In January 1994 the State Department terminated the suspension with respect to all PRC nationals, but continued to prohibit access to any MTCR related technology by any PRC national affiliated with the Chinese Ministry of Aerospace Industry or any Chinese government activity relating to missile development or production, electronics, space systems or equipment, and military aircraft. Ten such Chinese activities were enumerated as examples to Hughes, including CGWIO, CASC, et alia. Faced with these developments in USC policy, Hughes had in the interim redefined the second APSTAR satellite based on its 601 series and, in the interim (November 1993), sought and received approval for the export of this satellite from the Department of Commerce. The Respondents have maintained (most recently in a letter dated December 3, 2002, that no violation occurred in this matter because the Department of Commerce was "well within its authority" to approve release of the launch I failure material that was given to the Chinese in the APSTAR II failure investigation through a commodity classification (CCATS #G000824, dated August 26, 1995). However, the record indicates Respondents knew chat the Apstar II launch failure investigation was properly within the coverage of the ITAR and, hence, required Department of State approval; in any case, the Department of Commerce has said it erred in that matter. ________________________________________________________________ 7 failure of the APSTAR-2 mission in a spirit of mutual benefit."6 (11) By letter dated January 31, 1995, Respondents informed PRC authorities that "Hughes is prepared to fully cooperate with you in investigating this failure so that we may quickly resume launches of the Long March. I have instructed our people to make available whatever data and resources are required to understand the cause and fix the problem. Again, I want to make clear that I strongly support our mutual cooperation, including meaningful technology transfer, and I am prepared to bring the full capability of Hughes to the partnership."7 (12) Notwithstanding the established prohibitions and restrictions contained in the US-PRC bilateral agreement, which formed an essential basis for the launch of all U.S. manufactured satellites from the PRC, and notwithstanding Respondents’ careful understanding of these prohibitions and restrictions (from prior discussions with and licenses approved by ODTC), Respondents took numerous actions, some of which are described herein, in violation of the Act and the Regulations. Notably, Respondents decided to form and direct a launch failure investigation beginning in January 1995 and continuing throughout much of that year. The investigation involved the formation of several groups of leading technical experts from China and the U.S., which throughout the investigation engaged in an extensive exchange of technical data and analysis, producing a wide range of unauthorized technology transfers and the violations enumerated in PART II, below.8 Additionally, both ---------------------------------------------------------------- 6 Memorandum of Understanding Concerning the Mission Failure, dated January 26, 1995, between He Kerang, APT Satellite co,., Ltd., Yu Pusheng, China Great Wall Industry Corp., Donald Cromer, Hughes Space and Communications and Paul B. O’Connor, Johnson & Higgins Insurance Company. 7 Letter dated January 31, 1995, from Steven Dorfman, Senior Vice President, GM Hughes Electronics to Minister Liu Jiyuan. China Aerospace Corporation. 8 An HSC facsimile message dated May 14, 1995, describes the scope of technical interchange with APT officials; "(W)e of course briefed APT about everything, including the fairing concerns. APT had been present in all of the failure meetings to date, and has copies of everything from both sides." ________________________________________________________________ 8 parties contracted an independent investigation team of private consultants and aerospace industry experts.9 (13) At no time did the Respondents seek or receive a license or other written approval concerning the conduct of their APSTAR II failure investigation with PRC authorities or the experts who participated in that investigation as required by Section 38 of the Act and relevant provisions of the Regulations. Such approval would not, of course, have been forthcoming in view of the established legally binding prohibition in the 1993 (and predecessor) US-PRC agreement and as reflected in the prohibitions and limitations contained in prior export authorizations related to China that ODTC had furnished to Respondents. This said, Respondents HE and BSS have continued to maintain that the reason no written approval was sought was because none was required.10 (14) Instead, a March 21, 1995, internal memorandum of Respondents summarized the corporate strategy for the APSTAR II failure investigation: ---------------------------------------------------------------- 9 Indeed, the scale and depth of technical assistance furnished to Chinese authorities in this matter is indicated by the organizational structure of the failure investigation: a Failure Investigation Team was formed to examine all aspects of the failure, including the satellite and rocket and "external interfaces" with CALT, CGWIC, et al, and produced a 38 page report based on the work of seven specialized sub-teams (spacecraft debris, material properties, video analysis, telemetry, coupled loads, structures and aerodynamics) drawing on the experiences of members who also worked on the Optus failure; & Spacecraft Focus Team reviewed the work of the Failure Investigation Team and produced an 84-page report assessing whether and how the satellite might have been a contributing factor in the failure; an Independent Review Team provided Respondents with an independent assessment of the work of the other teams; an International Oversight Team reviewed the work of both sides and included representatives of China and Respondents, as well as third party foreign nationals. The IQT met on three separate occasions between April and June. 10 December 3, 2002, Letter to ODTC Director Lowell from HEC/BSS Counsel Randall Turk, Esq (Baker Botts). ________________________________________________________________ 9 "(I)n the 82 (OPTUS 82) investigation, communication between companies was limited due to Government Monitor oversight from DOS (Department of State) and fear by the Chinese that Hughes was trying to prove that the fairing was at fault.... (K)eep communication open with the Chinese long enough to get the information needed to understand the fairing and the rocket - Without Government monitor (now under the Department of Commerce license) and without the appearance of pointing our finger, the Chinese have been much more open to giving data we need."11 (15) This strategy was further influenced by Respondents' business interests in securing future contracts with the PRC and with Asian satellite companies in which PRC influence figured prominently, and concern that U.S. Government policy constraints on technology transfer as administered by ODTC were an impediment to achieving these interests. A May 2, .1995, internal memorandum of Respondents regarding a meeting with APT, summarizes this assessment: "ARSTAR 2 and APMT decisions (discussed further below) will be within a global context (technology transfer, launch vehicle commitments, long term manufacturing partnership with China). Key to that global context is technology transfer. This made it extremely clear that it is time for Hughes to either "put up or shut up" in regard to meeting their (sic) previously stated commitment of transferring technology to China. If we want to win APT (APMT) Hughes must make real commitment to transferring technology to China.12 INTELSAT 708 and APSTAR lA (16) On June 23, 1995, the Department of Commerce approved an export license for Respondents to export the APSTAR lA satellite to China for launch on the Long March 3B 5EV and sale to APT. The Commerce license specifically ---------------------------------------------------------------- 11 Hughes Space and Communications Company document dated March 21, 1995, Strategy for APSTAR Failure Investigation. 12 Hughes Space and Communications facsimile message dated May 2, 1995, from Steven Dorfman to John Konrad et al., Subject: Status and Recommendations May 2 Meeting with APT. ________________________________________________________________ 10 provided, in part, that “technical data or assistance related to the design, development, operation1 maintenance, modification, or repair of the Chinese launch vehicle is not authorized under this license.13 (17) On February 15, 1996, the PRC’s Long March 3B SLV crashed during a tailed attempt to launch the INTELSAT 708 satellite manufactured by Space Systems/Lora]- ("SS/L") - (18) On February 22, 1996, Respondents' Chairman at the Board wrote to Chinese General Shen Rongjun (then Deputy Director of the Commission for Science, Technology, and Industry for National Defense "COSTIND") and asked "if there is anything we at Hughes Space and Communications can do to support your investigation into the cause of the loss (i.e., LM 3B and INTELSAT 708)."14 The next day, February 23, 1996, Respondents' Chairman wrote to Major General Hu Shixiang, Director of the Xichang Satellite Launch Center, to assure him of his "personal support and that of my company as you investigate the causes for the loss." (19) On March 9, 1996, Respondents’ personnel met with Xichang launch center authorities, toured the crash site, conducted a site survey, and developed a list of twenty-five items that required resolution before the launch of APSTAR lit could take place later that year, which launch was slated to rely on the LM 3 SLV.15 ---------------------------------------------------------------- 13 Department of Commerce export license no. D-219965. 14 Respondents maintain that the CEO Cromer letters were merely an expression of condolence for the deaths of Chinese citizens. It is true that the letter to Major General Hu Shixiang (but not the letter to General Shen Rongjun) did offer condolences for the loss of life in its introductory paragraph as follows: "Please allow me to express my sincere condolences for the loss of the Long March 3B carrying Intelsat 708. I was particularly saddened to learn there may have been a number of lives lost, including some of your own personnel. I was gratified to hear, however that damage to your facilities was relatively light and I know you will soon be fully operational once again." 15 Respondents suggest their motive for this activity, which concerned chiefly repairs of the facility, was to ensure the safety of their own personnel and have continued to assert that "the site survey was perfectly lawful" (December 3 letter from Turk to Lowell. However, this assertion also ________________________________________________________________ 11 (20) On March 10, 1996, Respondents' personnel presented CALT, CGWIC, and APT with the results of its survey. (21) On March 14, 1996, Respondents' personnel met in Beijing with APT, CLTC, OMIT, CGWIC and representatives of the international insurance industry in which Respondents and Chinese authorities were informed that: (a) a final report on the root causes of the INTELSAT 708 launch failure would be required, as well as (b) a review of the report by an independent oversight team. These requirements were fully consistent with the groundwork already laid by Respondents who had already informed Chinese authorities on March 10, 1996, that more information would be needed to convince the insurance underwriters that an adequate investigation had been conducted to isolate the cause of the LM-3B failure and that a detailed presentation would be needed to convince the, underwriters that the LM-3 launch vehicle (slated to launch Respondents' APSTAR lA satellite) was substantially different from the LM-3B and thus did not run the risk of experiencing the same failure. (22) Chinese authorities initially invited Respondents to head up the oversight team for INTELSAT 708 (as it had done for OPTUS B2 and APSTAR II), but in the event, Respondents declined and opted to participate in an SS/L led investigation.16 ---------------------------------------------------------------- ignores the fact that the prohibition on assistance to the PRC launch program extends explicitly to the PRC launch "facility" (See para. 6, above), as long stated in the US-PRC bilateral agreement. 16 Apparently in order "not to rock the boat" while an export license application for yet another satellite export involving China (ie, APMT) was undergoing review in the USG (April 8, 1996, memorandum from Herron to Cromer) and in light of Respondents' assumption that SS/L's chairmanship would act as a "buffer" for it (e.g... an April 9, 1996 response to Herron from Steinhauer opines that "it is in HSC advantage to stay engaged. An outside consultant may buffer HSC somewhat relative to the technology transfer issue." Also, a May 6, 1996, message to SS/L from Steinhauer referring to "detailed suggestions for specific testing in the controls laboratory, for specific fixes to the IMU (inertial measurement unit) single point wire solder joint ________________________________________________________________ 12 (23) Notwithstanding the Respondents' decision to opt for a lower profile in the 1996 SS/L-led failure investigation by the Independent Review Committee,17 they nevertheless participated fully in the 1996 launch failure investigation both through the assignment of two top technical personnel, often playing a leadership role both within the IRC in troubleshooting problems, and independent of the IRC, through separate, technical meetings with Chinese authorities. For example: (a) On April 10, 1996, Respondents personnel faxed nine questions pertaining to the LM 3B failure to GW Aerospace Corporation, a U.S.-based consulting company owned by CGWIC, which were to be forwarded to the LM 3B program office in Beijing "in order to ensure that the anticipated. Chinese failure report considered specific concerns related to the LM 3B failure ... and impact the cause may have on Hughes decision to launch the ABSTAP. lA satellite."18 (b) On April 25, 1996, Respondents personnel met with GW Aerospace personnel to discuss questions drafted in preparation for the second IRC meeting, in which Respondents' personnel subsequently reported that they had "thoroughly discussed the possibility of any other control and guidance system failure causes, specifically including the eight-engine performance and structural issues. We discussed the eight-engine (LM 3B) versus four-engine (LM ---------------------------------------------------------------- failure" notes that "the committee could be approaching the border of technology transfer, i.e., how to improve the launch vehicle" and asks "will SS/L be the filter for tech transfer issues?" (Respondents maintain that, despite appearances to the contrary, there is no connection between any of the preceding discussions and "the decision for Loral to take the lead with respect to oversight of the investigation.") 17 Charges associated with SS/L's conduct related to the IRC were resolved through a Consent Agreement entered into between SS/L, Loral Space & Communications and the Department in January 2032. 19 Hughes Space and Communications facsimile transmission dated April 10, 1996, from R. Steinhauer, Hughes Chief Scientist, to Tian Guodang, GW Aerospace Corporation, Subject: Questions for the APSTAR lA Insurance Meeting. ________________________________________________________________ 13 3A) lift off vibration and acoustic environment at the IMU. CALT will have to investigate this further."19 (c) On April 30 and Pay 1, 1996, Respondents in a "splinter group" of IRC experts concerned with attitude control advised the Chinese of tests that could be done using equipment available at CALT's factory in order to replicate the launch failure and confirm the Chinese theory of the IMU in the LM-3B failure scenario, as well as differences between the LM 3B and LM 3 IMUs.20 APMT and Sino-Canada (24) On May 8, 1998, Respondents announced that they had concluded a contract with Asia Pacific Mobile Telecommunications Satellite (APMT), a company sponsored by Chinese and Singapore partners, for a satellite based mobile phone system. The turnkey system was to include two satellites to be launched from China on the Long March 3B SLV, five gateways, one network operations center, one satellite operations center and an initial purchase of 70,000 user terminals, with the ground network equipment and handsets to be provided by HUGHES NETWORK SYSTEMS.21 (25) APMT's Chinese shareholders and partners included China Satellite Launch and Tracking Control General, China United Telecommunications Satellite Company, China Overseas Space Development & Investment Company. (26) In June 1995 Sino-Canada Telecommunications and Investment Management Company, Ltd. was incorporated in Macao, having its principal place of business at the Hotel Fortuna, in order to explore telecommunications ---------------------------------------------------------------- 19 Email message from R. Steinhauer to John Smay et al. dated April 26, 1996, subject; Discussions with Huang Zuoyi 20 Letter from Wah Lim, Senior VP, SS/L, to Liu Zhixionq, VP CGWIC regarding Second IRC Meeting in Beijing. 21 The U.S Government ultimately rejected the export license application for this project when by letter dated February 24, 1999, the Department of Commerce informed Hughes of its intention to deny several license applications for APMT in light of concerns expressed by the Department of State regarding the planned launch services. ________________________________________________________________ 14 opportunities in the PRC related to APMT.22 Sino-Canada's managing director, Suen Yan Kwong, was the founder of Chung Kiu Telecommunications (CKT), which had invested in cellular telecommunications for use under special network by China's People's Liberation Army (PLA) in military districts along the coastal provinces. (27) On January 2l, 1999, in the course of a meeting with ODTC it Washington, D.C., Respondents' Vice President and General Counsel advised that Respondents had become concerned about a $5 million foreign sales agreement with Sino-Canada related to APMT entered into by Respondents (which had not been reported to ODTC at the time of Respondents' technical assistance agreement submission for APMT on June 1, 1998 as required by S 124.12(a)(6)), and that Respondents had retained Kroll Associates to examine this matter ($500,000 had already been paid to Sino-Canada and an additional $25 million was held in escrow). ODTC requested a statement as to whether any of the payments concerned, in particular, political contributions, which Respondents subsequently reported negatively, and whether the Kroll report would be made available to ODIC, which Respondents have declined to furnish on the grounds of attorney-client privilege.23 APMT and Shen Jun (28) On July 9, 1996, Respondents submitted a munitions export license application to ODTC seeking authorization for one of its employees, Shen Jun, described as a dual Canadian Chinese national, in order to provide Chinese-English language translation and interpretation support for the ---------------------------------------------------------------- 22 Respondents advise that opportunities related to APMT was not the sole business activity of, or the sole purpose for, Sino-Canada's incorporation. 23 Respondents now maintain that their prior General Counsel erred in that meeting and that, while there were preliminary discussions with Kroll about conducting a background investigation of Sino-Canada, Respondents ultimately elected to have the background investigation conducted by outside counsel other than Kroll (which investigative report has similarly been withheld from ODTC by Respondents). ________________________________________________________________ 15 preliminary design phase of the APMT satellite project.24 In no place in that submission nor otherwise did HUGHES SPACE AND COMMUNICATIONS COMPANY inform ODTC that this individual was, in fact, the son of PLA General and COSTIND Deputy Director Shen Rongjun, 25 which fact was material to the U.S. Government's consideration of whether the license application should be approved or denied.26 (29) The record indicates that Shen Jun’s role for Respondents went well beyond that of an interpreter/translator and more closely resembled that of an intermediary with his father, General Shen, and other PRC space authorities, in order to cultivate their support in various matters of interest to Hughes, including the handling of the APSTAR II launch failure investigation and the APMT contract.27 ---------------------------------------------------------------- 24 This license application was initially approved, but subsequently suspended by ODTC when it became known that Shen Jun was the son of Shen Rongjun. 25 According to a September 20, 1995 memorandum, Hughes regarded General Shen Rongjun as "the most important Chinese space official." 26 Respondents have maintained as of December 3, 2002, that this information was not material and that its omission was proper because there is no place in the munitions license application for them to disclose father-son relationships between General officers at the People's Liberation Army who are overseeing a project they are working on and their foreign national employees working in U.S. facilities on the same project. 27 An August 8, 1995, memorandum from Bruce Elbert reports on APMT related activities by Shen Jun: "in a telephone conversation last night with Jun he provided the following information after having talked to important people involved with APMT ... Lockheed Martin has sweetened their bid with technology transfers on launch vehicles and changed their price... These points were reiterated by the highest official he interfaced with Jun has the worry that if it goes wrong in Munich (an apparent reference to an APSTAR II launch failure briefing to insurance providers) we open the door for Lockheed Martin and their unique proposal for technology transfer on the launch vehicle. This could result in our not getting into the final round of APMT negotiations." The memo goes on to report that Shen Jun has been asked "to make a proposal to CASC and CGWIC that they describe their ________________________________________________________________ 16 ASIASAT 3 (30) By letter dated November 12, 1999, Respondent BSS provided a pre1iminary notification to ODTC of an intended voluntary disclosure of violations of the Regulations related to its ASIASAT 3 program, a satellite manufactured for the Asia Satellite Telecommunications Company in Hong Kong, whose principal owners are China International Trust & Investment Company (CITIC) and Societe Europeenne des Satellites (SES, a company incorporated in Luxembourg).28 By letter dated February 9, 2000, Respondents advised ODTC that its internal audit (now complete) had concluded its employees had provided ASIASAT personnel with technical data that exceeded the scope of its Department of Commerce license (and which was subject to State Department jurisdiction). (31) The unauthorized disclosures concerned two categories of information. First, unit-level FECMA (failure modes and criticality analysis) and worst case circuit analysis for the ASIASAT 3 satellite, which constitutes detailed design information subject to control under the Regulations and generally not releasable to foreign persons, had been made available to the ASIASAT organization in 1996 in five volumes of technical data. ODTC directed Respondent BSS to seek the return of this data from ASIASAT following the submission of the voluntary disclosure in February 2000, but Respondent was unable to effect the return of all the information from ASIASAT. Second, following abandonment of an ASIASAT field office at Respondents El Segundo, California premises, Respondent Boeing discovered additional technical data that had been (presumptively) accessible to a PRC national employee of ASIASAT assigned to the El Segundo field office. This technical data concerned production information for certain subsystems, including the Xenon ion propulsion system, which information as also generally not releasable to foreign persons. ---------------------------------------------------------------- redesign of the LM-2E fairing and that Hughes discuss what it will do only if we use the LM-2E again." 28 ASIASAT 3 was launched on December 25, 1997, from the Baikonur Cosmodrone in Kazakhstan, but did not reach its proper orbit when the upper stage of the Proton rocket failed. ________________________________________________________________ 17 ASTRA 1G/1H (32) By letter dated September 17, 2001, Respondent Boeing voluntarily disclosed to ODTC that its personnel improperly transferred controlled technical data to SES during a 1995 critical design review for the ASTRA lG satellite and a 1995 preliminary design review for the ASTRA 111 satellite, which satellites were being exported and sold to SES pursuant to a Department of Commerce license. The technical data improperly disclosed in this instance, as in the ASIASAT 3 matter, above, exceeded the conditions of the Commerce license (and required a State Department license, which was not sought) and concerned electrical power subsystems that contained unit level FECMA and worst case circuit analysis; such detailed design information is generally not releasable to foreign persons. License and Reporting Requirements (33) S 126.1(a) of the Regulations provides that it is the policy of the United States to deny, among other things, licenses and other approvals) destined for or originating in certain countries, including china. (34) S 126.1(e) of the Regulations provides that no sale or transfer and no proposal to sell or transfer any defense service may be made to any country referred to in this section and that any person who knows or has reason to know of any actual transfer of such services must immediately inform ODTC. (35) S 127.1(a) (1) of the Regulations provides that it is unlawful to export or attempt to export from the United States any defense article or technical data or to furnish any defense service for which a license or written approval is required without first obtaining the required license or written approval from the Office of Defense Trade Controls. (36) S 127il1a) (3) of the Regulations provides that it is unlawful to conspire to export, import, reexport or cause to be exported, imported or reexported, any defense article or to furnish any defense service for which a license or written approval is required without first obtaining the ________________________________________________________________ 18 required license or written approval from the Office of Defense Trade Controls. (37) S 127.1(a) (4) of the Regulations provides that it is unlawful to violate any terms and conditions of licenses or approvals. (38) S 127.1(b) of the Regulations provides that any person who is granted a license or other approval is responsible for the acts of employees, agents, and all authorized persons to whom possession of the licensed defense article or technical data has been entrusted regarding the operation, use, possession, transportation, and handling of such defense article or technical data abroad. (39) S 127.1(d) of the Regulations provides that no person may willfully cause, or aid, abet, counsel, demand, induce, procure or permit the commission of any act prohibited by, or the omission of any act required by 22 U.S.C. S 2778, 22 U.S.C. S 2779, or any regulation, license, approval, or order issued thereunder. (40) S 127.2 of the Regulations provides that it is unlawful to use any export document containing a false statement or misrepresenting or omitting a material fact for the purpose of exporting any defense article or technical data or the furnishing of any defense service for which a license or approval is required. (41) S 130.9(a) (1) of the Regulations requires that each applicant must inform the Office of Defense Trade Controls as to whether it or its vendors have paid, or offered or agreed to pay, in respect of any sale for which a license or approval is requested: (i) political contributions in an aggregate amount of $5,000 or more or (ii) fees or commissions in an aggregate amount of $100,000 or more. If so, an applicant must provide the detailed information specified in SS 130.10 and 130.11 * * * PART II - THE CHARGES APSTAR II ________________________________________________________________ 19 Charges 1-3 (42) The Respondents violated 22 C.F.R. 5. 127.1(a) (3) when on or about January 26, 1995, and continuing over the course of the next eight months, they conspired with Chinese authorities and other third party foreign nationals to furnish defense services to China related to the failure and future functioning of the Long March 2E space launch vehicle (SLV) following the APSTAR II accident, for which a license or other written approval was required; violated S 126.1(e) concerning prohibited exports, when they offered defense services (i.e., "proposed") in connection with the tailed launch of the Apstar II; and also violated S 127.1(d) when they willfully caused or aided, abetted, counseled, demanded, induced, procured or permitted the commission of an act prohibited by a regulation issued pursuant to 22 U.S.C. S 2778. Charges 4-14 (43) Respondent BSS violated S 127.1(a) (1) of the Regulations when, without the required license or other approval from ODTC, the Failure Investigation Team provided expert analysis and advice in spacecraft debris, material properties, video analysis, telemetry, coupled loads, structures and aerodynamics1 summarized in a 38-page report; when the spacecraft Team provided expert analysis and advice in assessing the work of the Failure Team and whether or how the satellite contributed to the failure, summarized in an 84-page report; and, when the international oversight Team provided expert analysis and advice in three meetings held between April and June 1995 during which the results of the investigation were discussed. Charges 15-17 (44) Respondent BSS violated S 127.1(a)(1) of the Regulations when, on or about February 10, 1995, without the required license or other written approval from ODTC, it identified for Chinese authorities the incorrect seating during flight of the LV clamp band; diagnosed that LV clamp band slippage was possibly caused by vibrations and the choice of lubricant on the band; and recommended review of this area by Chinese authorities prior to future flights. ________________________________________________________________ 20 Charges 18-20 (45) Respondent BSS violated S 127.1(a)(l) at the Regulations when, on or about February 10,1995, without the required license or other written approval from ODTC, it identified for Chinese authorities possible design flaws in the venting system of the payload fairing (or nose cone at the rocket); compared it to Western standards; and recommended that Chinese authorities review this area prior to future launches. Charges 21-23 (46) Respondent BSS violated S 127.1(a) (1) of the Regulations when, on or about February 10, 1995, without the required license or other written approval from ODTC, it provided for Chinese authorities expert identification of possible design flaws in the nose dome of the fairing and of similarities in the probable failure of the nose dome for both Apstar II and Optus B2 detected by Respondents' analysis of payload fairing debris recovered from the two accidents. Charges 24-25 (47) Respondent BSS violated S 127.1(a) (1) of the Regulations when, on or about February 9-10, 1995 and May 8, 1995, without the required license or other written approval from ODTC, it provided for Chinese authorities expert identification of inaccuracies, omissions and the like associated with Chinese debris investigation and, further, provided insights into U.S. analytical techniques concerning recovered debris1 which Respondent supported with technical drawings, photographs and modeling where expedient. Charges 26-31 (48) Respondent BSS violated S 1271(a) (1) of the Regulations when, on or about February 13, 1995 and April 12-13, 1995, without the required license or other written approval from ODTC, it identified for Chinese authorities telemetry data as an important - - if not that most important - - source of information regarding the failure; it disclosed to China how their (i.e., CALT and CGWIC) analysis of telemetry data revealed deficiencies with respect to four ________________________________________________________________ 21 areas -- trajectory corrections due to wind shear effects, incorrect interpretations of accelerometer data, a probable anomaly with the clamp band, and a probable fault with the payload fairing venting process --; and it outlined for China the history of the flight compiled from telemetry data, including seventy-seven individual points that were critical to the Respondents' analysis. Charges 32-36 (49) Respondent ESS violated S 127.1(a) (1) of the Regulations when, on or about February 13, 1995 and May 8, 1995, without the required license or other written approval from ODTC, it jointly conducted with Chinese authorities a re-analysis of the coupled load analysis (CLA)29, in which expert advice was shared by Respondent with respect to U.S. expertise in modeling, calculations and methodologies in order to affirm or critique pre-flight modeling conducted by the Chinese, alone, and to demonstrate, in particular, deficiencies in china’s pre-flight CLA with respect to its failure to account for high winds aloft and buffeting and the Long March 2E's guidance system failure to compensate for upper level winds. ---------------------------------------------------------------- 29 CLA simulates and assesses interplay of the loads on the SLV during flight, including interaction of the SLV and the satellite. The Respondents concluded that the Chinese had not performed an analysis of the cantilevered loads from the payload stack to the fairing and, hence, had no real idea of the true loads on the fairing arising from wind shear and buffeting. Respondents have maintained as at December 3, 2002, that they did not "jointly conduct" a CLA and that all they did "was check to be sure chat it (Hughes) had properly prepared the Hughes data for the CLA" and did not overlook anything. (See December 3, 2002 letter from Turk to Lowell.) However, according to information in Respondents' own files, the coupled loads team "reviewed all of the coupled loads analysis information that was available... - They compared the flight data from the spacecraft accelerometers that have flown on the Long March, the Atlas, and the Ariane. They traveled to Beijing to work beside the CALT engineers to review and participate in the Coupled Loads Analysis methodology. (emphasis added) They expanded the standard spacecraft dynamic model (normally good to 75 Hz) to be valid up to 100 Hz." See HSC 002803. ________________________________________________________________ 22 Charges 37-38 (50) Respondent ESS violated S 127.1(a) (1) of the Regulations when, on or about March 8, 1995, without the required license or other written approval from ODTC, it compared and contrasted for Chinese authorities China's CLA with Western expert analysis related to the U.S. Atlas and French Ariane SLVs. Charge 39 (51) Respondent BSS violated S l27.l(a) (1) of the Regulations when, on or about June 14, 1995, without the required license or other written approval from ODTC, Respondent's consultant furnished to Chinese authorities in a letter dated June 14, 1995, addressed to Liu Zhixiong (CGWIC Vice President) and Donald Cromer (HSC Vice President) conclusions with respect to the APSTAR II launch failure, as well as its likely cause and suggestions for further evaluation by China.30 Charges 40-41 (52) Respondent BSS violated S 127.1(a) (1) of the Regulations when, on or about March 15, 1995,31 without the required license or other written approval from ODTC, it provided to Chinese authorities the results of an analysis of China's payload fairing and identified flaws in the rivets used to secure the zipper area of the fairing.32 Charges 42-43 ---------------------------------------------------------------- 30 Respondents assert that the characterization of the IOT team member as "Respondents' consultant" is a mischaracterization and chat in sending the referenced letter, the person was acting as an independent member of the lOT and not as Hughes' agent. However, information available to ODTC confirms that Respondents in fact, arranged this person's participation in the IOT and that Respondents viewed him as their "consultant." 31 See Apstar 2 Failure Investigation Report Structure's Group Status Report of March 15, 1995. 32 A "zipper" holds the fairing’s two halves together. ________________________________________________________________ 23 (53) Respondent BSS violated S 127.1(a) (l) of the Regulations when, without the required license or other written approval from ODTC, it identified for Chinese authorities possible design flaws and improper installation associated with the launch vehicle clamp band.33 Charges 44-45 (54) Respondent BSS violated S 127.l(a)(1) of the Regulations when, without the required license or other written approval from ODTC, it identified material and design faults with the Chinese-manufactured interface adapter and recommended to China more detailed analyses and development tests on specific interface hardware and integrated spacecraft, third stage and adapters for the future.34 Charge 46 (55) Respondent BSS violated S 127.1(a) (1) of the Regulations when, on or about April 21, 1995, without the required license or other written approval from ODTC, it provided to Sun Jiadong copies of the APSTAR II failure review charts and the APSTAR II failure review status report. Charge 47 (56) Respondent BSS violated S 127.1(a) (1) of the Regulations when, on or about April 24, 1995, without the required license or other written approval from ODTC it provided to a third country foreign national 35 copies of the same (as in Charge 45. above) APSTAR II failure review charts and the APSTAR II failure review status report. Charges 48-55 (57) Respondent BSS violated S 127.1(a) (1) of the Regulations when, on or about May 22, May 23 and June 5, 1995. without the required license or other written approval ---------------------------------------------------------------- 33 See Apstar 2 Failure Review Management Splinter Meeting of April 12, 1995. 34 See Structure's Group Status Report of April 12, 1995. 35 Pierre Madon, a foreign national member of the APSTAR II launch failure international oversight team. ________________________________________________________________ 24 from ODTC, it provided briefings to Sun Jiadong and the same third country foreign national (as in Charge 47, above) concerning LM-2E failure conclusions; telemetry information; response to CALT video; and, interstage conclusions. Charges 56-60 (58) Respondent BSS violated S 1271(a) (1) of the Regulations when, on or about October 25, 1995, at a meeting in Beijing, without the required license or other written approval from ODTC, it provided detailed briefings to Chinese authorities and APT (as well as other foreign persons) concerning the APSTAR II failure investigative process, its summary conclusions, failure scenarios, fishbone diagram and corrective actions. Charge 61 (59) Respondent BSS violated S 127.1(a) (1) of the Regulations when, on or about October 31, 1995, at a meeting in Munich, without the required license or other written approval from ODTC, it provided similar briefings (as in Charges 56-60, above) to fifty-one foreign persons representing insurance underwriters. Charge 62 (60) The Respondents violated S 126.1(e) of the Regulations when they tailed, until directed to do so in writing by ODTC in May 1996, to inform ODTC of the actual transfer of defense services they had made, or knew or had reason to know of, as outlined above, to a country prohibited by S 126.1(a). INTELSAT 708 Charges 63-64 (61) Respondent BSS violated S 127.l(a) (1) at the Regulations when, on or about March 9, 1996, it conducted a survey of the crash site of the INTELSAT 708 spacecraft and China's Xichang space launch facility and on or about March 10, 1996, it described for Chinese authorities twenty-five (25) corrective actions chat China needed to implement at the Xichanq space launch facility in order to ensure ________________________________________________________________ 25 Respondents' commitment to the launch of APSTAR lA on the Long March 3 SLV.36 Charge 65 (62) Respondent BSS violated S 121.1(a) (1) of the Regulations when, on or about April 15-16, 1996, without a license or other written approval from ODTC it participated in a briefing hosted by Chinese authorities on the Long March 3B failure and outlined its (Respondent's) findings for the benefit of insurance brokers from the aforesaid launch site survey of the crash. Charge 66-67 (63) Respondent BSS (formerly HSC violated S 126.1(e) of the Regulations when on or about April 16, 1996, it agreed to the charter for an Independent Review Committee (IRC) proposed by Chinese authorities for the INTELSAT 708 launch failure investigation which charter itself contemplated the transfer of defense services to a country referred to in S 126.1, without a license or other written approval from ODTC and Respondent HE also violated S 126.1(e) when it failed to immediately inform ODTC of the proposed transfer, HE having known of the proposed investigation as a result of its senior management's visit to the PRC on the proposal after April 9, 1996. ---------------------------------------------------------------- 36 Respondents have maintained as of December 3, 2002 (ID) that the 25 action items were authorized under the Commerce license pursuant to "Go/No Go Criteria Exchange" and "Safety Plans." However, Respondents own tiles indicate that they, themselves, did not consider the 25 action items to be covered under the rubric of range safety; certainly there is no basis in practice to support any such interpretation by Respondents. See HSC's June 27, 1996 Report to ODTC on Alleged Violations of the ITAR (p. 4). More fundamentally, it is clear that the 25 action items related principally to the repair of the launch facility (i.e., "items to be fixed or replaced"; e.g., windows, electrical supply, etc.), that repair of a space launch facility is quintessentially a defense service, and that assistance in the repair of the launch facility is expressly prohibited by the U.S.-PRC bilateral agreement. 37 Respondents maintain that the general prohibition on proposals to furnish defense services to countries ________________________________________________________________ 26 Charge 68 (64) Respondent BSS violated S 127.1(a) (1) of the Regulations when, oh or about April 26, 1996, without a license or other written approval from ODTC its chief scientist, one of two expert representatives in the IRC, discussed thoroughly with GW Aerospace 38 possible failure causes other than the control and guidance, including engine performance and structural issues associated with Long March 3B.39 ---------------------------------------------------------------- proscribed at S 126.1 does not apply in this instance because the agreement of their experts to the defense services envisaged in the IRC charter proposed by Chinese authorities does not meet what they consider to be a limiting definition of "proposals" in S 126.8. However, that latter provision merely details the procedures to be followed for prior notification and prior approval (which Respondents did not follow in any case) when proposals are made to sell or transfer significant military equipment; it does not provide a limiting definition of the term “proposal” as used in S 126.1(e). In fact, the term "proposal" as used in S 126.1(e) appropriately covers the acceptance of proposals made to U.S. persons by senior military authorities of proscribed destinations, as well as proposals initiated by U.S. persons. In the case of the IRC charter, each member, including Respondents' personnel, agreed to the terms of the charter. Regardless of how "proposals" with regard to proscribed countries may be initiated, S 126.1(e) makes abundantly clear that it is the policy of the Department of State to deny such proposals. 38 GW Aerospace is a U.S. based consulting firm owned by CGWIC. 39 Respondents have contended as of December 3, 2002, that the purpose of the meeting was simply for Steinhauer to be brought up to date on the results of the recent IRC meeting in Palo Alto and that information flow in this meeting was from GW Aerospace to their chief scientist Steinhauer - not the other way around. However, Mr. Steinhauer’s own report of the meeting with GW Aerospace is at odds with this contention as he describes detailed technical discussions between himself and Huang Zuoyi, the former chief designer of the Long March 2C while at CALT: "Thoroughly discussed the possibility of any other than control & guidance system failure causes, specifically including the eight-engine ________________________________________________________________ 27 Charges 69-77 (65) Respondent BSS violated S 127.1(a) (1) of the Regulations when, on or about April 10, 1996, without a license or other written approval from ODTC, its chief scientist transmitted nine questions concerning the launch failure investigation by facsimile to GW Aerospace for forwarding, in turn, to the Long March program office in Beijing, which questions were provided "in order to ensure that the anticipated Chinese failure report considered specific Concerns related to the LM-3B failure and impact the cause of the failure may have on Hughes decision to launch APSTAR lA satellite."40 ---------------------------------------------------------------- performance and structural issues." Also, "discussed the eight-engine versus four-engine lift-off vibration and acoustic environment at the IMU" and that "unusual acoustic reflections could be involved" which "CALT will look at...." In addition, Huang and Steinhauer discussed the details of the specific area where CALT believes the failure site to be located, leading Steinhauer to conclude that the Chinese probably have a very poor design with respect to manufacturability, particularly in respect to the soldering procedures in the LM3B IMU final assembly. 40 Facsimile transmission from Steinhauer to Tian Guodang of GW Aerospace. Again, Respondents have asserted as of December 3, 2002, that these questions were about the LM 3B and concerned tests that were performed prior to flight. which cannot qualify as defense services. Even had these questions generally concerned prior tests (which they did not). Respondents' conclusion would still be wrong as such questions would nonetheless serve to direct Chinese authorities in their investigations to help explain the launch failure. However, in this instance the questions, themselves, were clearly, designed to lead to the identification of the root cause of the failure for purposes of assuaging insurance underwriters and do not generally concern prior tests. For example, question no. 4) was: "Did problem occur in flight after lift-off, or was it preexisting?" Question no. 7) was: "Explain three oscillations during 22's flight?" Question no. 9) was: "Understand that launch vehicle platform at pad was rotated in order to correct for laser alignment of launch azimuth very close to lift-off of the LM 3B. Describe this activity and its implications on the launch performance." ________________________________________________________________ 28 Charges 78-101 (66) Respondent BSS violated S 127.l(a)(l) of the Regulations when, without a license or other written approval from 0DTC, during the first IRC meeting (April 22-24, 1996, Palo Alto), together with other international experts who comprised the IRC, it delineated for Chinese authorities twenty-four areas 41 for further technical investigation and/or analysis upon concluding that simulation tests and other analysis presented to the IRC by CGWIC and CALT could not fully explain why, where or when the Long March rocket's inertial measurement unit (IMU) failed. Delineation of the twenty-tour areas was for the purpose of identifying critical details of the failure mode then unanswered and of identifying corrective action by Chinese authorities based on the most likely cause(s) of the LM-3B failure and the isolation of these causes from the PRC's LM-3 rocket to be used for the, then, upcoming launch of APSTAR lA manufactured by Respondent. Charges 102-112 (67) Respondent BSS violated S 127.1(a) (1) of the Regulations during the second IRC meeting (April 30-May 1, 1996, Beijing), when, without a license or other approval from ODTC, after reviewing extensive documentation provided by Chinese authorities and interviewing or hearing presentations from over one hundred Chinese engineers and technical personnel, together with other international experts, it joined other IRC members in furnishing unauthorized defense services in eleven areas.42 ---------------------------------------------------------------- 41 These 24 areas set forth in the form of detailed technical questions and/or guidance or recommendations for specific follow-up analysis covered a range of potential factors associated with design, operation, manufacturing, testing and performance of PRC rockets, including the LM-3B, LM-3 and LM-2E. 42 Specifically, the IRC; (1) concurred that the most likely failure mode was the inertial platform; (2) urged the Chinese to perform additional hardware in the loop testing or (3) computer analysis to simulate the complete failure cycle; recommended (4) additional acceptance test procedure, (5) design for producibility, (6) reliability operation, and (7) better IMU assembly procedure; (8) validated that the ________________________________________________________________ 29 Charge 113-114 (68) Respondent BSS violated S 127.1(a) (1) of the Regulations when, without a license or other written approval from ODTC, on or about May 1, 1996, it suggested to other IRC members, some of whom were foreign persons within the meaning of the Regulations, that the Beijing Control Institute should set up a way to incorporate an intermittent wire into their control simulation test and demonstrate the exact proposed failure scenario responses, such that China could confirm or refute its prior conclusion as to the cause of the failure 43 and when it suggested that a higher fidelity failure scenario test be performed in the CALT Control Institute laboratory. Charge 115 (69) Respondent BSS violated S 126.1(e) of the Regulations when it tailed to inform ODTC of the planned export of the IRC report to Chinese authorities. APMT and Sino-Canada Charges 116-117 (70) Respondents violated S 130.9 of the Regulations when they failed to make timely disclosure of $5 million in commissions paid and promised to Sino-Canada in connection with the procurement of the APMT satellite and also violated S 127.1(d) when they willfully caused, aided, abetted, counseled, demanded1 induced, procured or permitted the ---------------------------------------------------------------- LM-3 and LM-3B inertial platforms are separate and distinct owing to the LM-3's different inner gimbals drive circuit and redundancy by design; and specified additional test/analysis verification in three areas (9-11) continued study by the Chinese of the telemetered 15 Hz resonant frequency (to include interviews of technical personnel who installed the IMU); and drawing up of a detailed list of IMUs of the LM 3A, 3B and 3C (to include their production, assembly, test locations and mission assignments). 43 May 1, 1996, Steinhauer email to Herron regarding Smay test. ________________________________________________________________ 30 omission of an act required by a regulation issued pursuant to 22 U.S.C. S 2779. APMT and Shen Jun Charge 118 (71) Respondent BSS violated S 127.2 of the Regulations concerning misrepresentation and omission of material facts when it failed to disclose in connection with the submission of munitions license application no. 678638 on or about July 9, 1996, that Shen Jun was, in fact, the son of General Shen Rongjun whose interest and influence Respondents were cultivating in connection with the APMT procurement and in other matters concerning satellite-related exports to China more generally.44 ASIASAT 3 Charges 119-121 (72) Respondent BSS violated the provisions of S 127.1(a) (1) when in 1996 its employees provided ASIASAT personnel with detailed design technical data that exceeded the scope of its Department of Commerce license (and which was subject to State Department jurisdiction), without the required license or other written approval from ODTC, concerning unit-level FECMA, worst case circuit analysis, and the Xenon Ion propulsion system. ASTRA 1G/1H Charges 122-123 (73) Respondent BSS violated the provisions of S 127.1(a) (1) when in 1995 its employees improperly ---------------------------------------------------------------- 44 As noted at footnote 26, page 11 of this draft charging letter, Respondents contend that the fact of the son-father relationship between their employee on the APMT project and the PLA general officer overseeing the APMT project was not material to the license application because there is no place on the license application for disclosing such familial relationships of their employees with senior military officers of the PRC. ________________________________________________________________ 31 transferred detailed design technical data to SES during a 1995 critical design review for the ASTRA 1G satellite and a 1995 preliminary design review for the ASTRA 1H satellite, without the required license or other written approval from ODTC. * * * PART III - ADMINISTRATIVE PROCEEDINGS (74) Pursuant to 22 C.F.R. S 128 administrative proceedings are instituted against Hughes Electronics Corp., including Hughes Network Systems, and The Boeing Company Boeing Satellite Systems (formerly Hughes Space and Communications) for the purpose of obtaining an Order imposing civil administrative sanctions that may include the imposition of debarment or civil penalties. The Assistant Secretary for Political Military Affairs shall determine the appropriate period of debarment, which shall generally be for a period of three years in accordance with S 127.7 of the Regulations. Civil penalties, not to exceed $500,000 per violation, may be imposed in accordance with S 127.10. (75) A Respondent has certain rights in such proceedings as described in S 128, a copy of which I am enclosing. You are required to answer the charging letter within 30 days after service. A failure to answer will be taken as an admission of the truth of the charges. You are entitled to an oral hearing if a written demand for one is filed with the answer or within seven (7) days after service of the answer. The answer, written demand for oral hearing (if any) and supporting evidence required by S 128.5(b) shall be in duplicate and mailed or delivered to ALJ Docketing Center, U.S. Coast Guard, 40 south Gay Street, Room 412, Baltimore, MD 21202-4022. A copy shall be simultaneously mailed to the Director, Office of Defense trade Controls. Department of state, 2401 £ Street, NW, Washington, D.C. If you do not demand an oral hearing, you must transmit within seven (7) days after the service of your answer, the original or photocopies of all correspondence, papers, records, affidavits, and other documentary or written evidence having any bearing upon or connection with the matters in issue. Please he advised also that charging letters may be amended from time to time, upon reasonable notice. Furthermore, cases may be settled ________________________________________________________________ 32 through consent agreements, including after service of a charging letter. (76) Please be advised that the U.S. Government is free to pursue Civil, administrative, and/or criminal enforcement for violations of the Arms Export Control Act and the International Traffic in Arms Regulations. The Department of State's decision to pursue one type of enforcement action does not preclude it or any other department or agency of the United States from pursuing another type of enforcement action. (77) In this regard, please permit me to recall that I have previously provided you with a copy of a letter dated November 13, 2002, addressed to me by the Assistant Commissioner for Investigations, U.S. Customs Service, informing me that U.S. Customs is considering bringing civil forfeiture proceedings against property owned by you. Under federal law, property involved in violations of the AECA and certain other statutes (e.g., Money Laundering Control Act, 18 U.S.C. 1956) is subject to civil forfeiture. This includes real estate that is used to facilitate these violations. Sincerely, William J. Lowell Director Enclosures cc: Artis N. Noel Counsel General Motors Corp. Robert Catania Chief Counsel Boeing Satellite Systems, Inc. Richard Hoglund (Acting) Assistant Commissioner (Investigations) U.S. Customs Service
- 1998 DEFENSE DEPT. REPORT ON HUGHES
- HUGHES SATELLITE IMAGE FACILITY FOR THE PLA
- CHINESE MISSILE PAGE