One of Bill Clinton’s China scandals may finally be coming to closure. In 1998, the New York Times’ Jeff Gerth broke a story about the Clinton administration’s willingness to permit two U.S. aerospace corporations to transfer sensitive missile technology to the Chinese. The CEO of one of the corporations, Loral, had pumped hundreds of thousands of dollars of campaign contributions into the Democratic National Committee. In return, the Clinton administration waived controls on Loral’s export of these technologies to the Chinese aerospace industry.
Hughes Space and Communications committed similar offenses, but it was shielded from investigation by CIA Director George J. Tenet. Hughes was a key supplier of U.S. intelligence collection satellites, so when suspicions first emerged about its illicit activities, CIA employees tipped off Hughes about the impending federal investigation. Loral admitted its transgressions last year and paid $14 million in fines, but Hughes has continued to insist on its innocence. “We don’t believe we’ve done anything wrong,” Hughes spokesmen told reporters.
But internal Hughes documents show that from 1995 on, the satellite maker gave China sensitive missile technology in order to win contracts in the emerging Chinese space market. The Chinese had demanded such assistance as the price of doing business and especially after they had suffered several catastrophic launch failures. Hughes promised the Chinese “whatever data and resources are required” to improve the reliability of their space launch vehicles. This included technical analyses of launch failures and information on guidance and telemetry systems. Much of the technology and expertise the Chinese gained was also applicable to their strategic nuclear missiles.
Now the U.S. State Department has proposed fines totaling over $60 million and bans on future exports, which could cost the company millions more in lost business. Just before Christmas, the Department charged Hughes, and its parent company Boeing Satellite Systems, with 123 violations of export control and arms transfer regulations. The charges also indicate that Hughes hired the son of a top Chinese aerospace general, who provided insider information on contract bids by one of Hughes’ major U.S. competitors.
The announcement also represents vindication for Gerth. He got a Pulitzer for his stories, but he was harshly attacked by the Clinton administration and its allies for reporting on the export control violations. Working through sympathetic journalists at the competing Washington Post, Clinton officials sought to downplay Gerth’s revelations and dismiss their significance.
One of Clinton’s favorite reporters was Walter Pincus of the Washington Post. His son was then the General Counsel at the Commerce Department, which had authorized the illegal transfers. Despite the obvious conflict of interest, Pincus repeatedly wrote or contributed to Post stories parroting the Clinton line. Pincus did not write the recent story about the Hughes’ fines.