[Congressional Record Volume 143, Number 53 (Tuesday, April 29, 1997)]
[Extensions of Remarks]
[Pages E772-E773]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
U.S. SECURITY WAS SOLD TO SUPPORT PRESIDENT CLINTON'S REELECTION
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HON. GERALD B.H. SOLOMON
of new york
in the house of representatives
Tuesday, April 29, 1997
Mr. SOLOMON. Mr. Speaker, the American people are becoming
increasingly concerned about certain aspects of the scandals
surrounding the White House.
In a recent letter to me, an attorney from our 22d District, Mr.
Robert W. Linville of Old Chatham, put it in words which, if
universally shared, suggested the concerns of many Americans. He
suggested that U.S. security was sold to support President Clinton's
reelection. He based his concerns on a recent article in the New York
Times, which I place in today's Record.
Officials Say China Illegally Sent U.S. Equipment to Military Plant
(By Jeff Gerth)
Washington, April 22.--A Federal criminal inquiry has
uncovered new evidence, including American satellite photos,
suggesting that a state-owned Chinese company had all along
intended to divert American machine equipment to a military
plant that builds missiles and fighter aircraft, intelligence
officials say.
The equipment, bought in 1994 by one of China's most
powerful state-owned corporations, Catic, was supposed to be
used solely for civilian purposes.
Now, as a year-old inquiry accumulates more evidence of a
diversion, the Clinton Administration is faced with the
question of how to proceed if it is proved that Catic
knowingly misled American officials. Administration officials
say the next step could be filing charges against the
company.
The new evidence also raises questions about the
Administration's approval of the sale in the first place,
officials said.
The Administration preliminarily approved Catic's purchase
of machine equipment from the McDonnell Douglas Corporation
in late August 1994; the equipment was supposed to be used in
Beijing to make civilian jetliners. The approval came about
the time Commerce Secretary Ronald H. Brown left for China,
where he helped persuade Chinese officials to keep their
commitment to spend $1 billion on jetliners from McDonnell
Douglas.
[[Page E773]]
But Pentagon critics of the sale had earlier said they
believed that the Chinese wanted the sensitive equipment,
which included giant machine tools to shape and bend large
aircraft parts, to improve their military capability,
Administration officials said. At the time, the Chinese press
had reported a Chinese Government plan to cut jetliner
production in half, which would have reduced the civilian
need for the American equipment.
In the end, some equipment sent from the United States
wound up 800 miles from Beijing, at a military complex of the
Nanchang Aircraft Company. The satellite photos recently
uncovered show that a plant was being built in Nanchang to
house a giant stretch press, a major piece of American
equipment, even as Catic was telling American officials that
the equipment would go to a civilian machining center in
Beijing, intelligence officials said.
American officials said other documents in the case
suggested that Nanchang had been the intended destination
from the start. Nanchang officials, for instance, inspected
some of the equipment at a McDonnell Douglas plant in Ohio
1993, before the deal was signed, and then packed up the
equipment in late 1994 as it was being shipped to China, the
officials said. The plan to build the Beijing machining
center, the supposed destination for the equipment, was
abandoned before the license was issued.
All that raises some diplomatically sensitive questions.
``We ought to send the Chinese the message that they can't
divert our technology with impunity, and an indictment of
Catic might even get the Chinese to talk to us seriously
about proliferation,'' said Gary Milhollin, the director of
the Wisconsin Project on Nuclear Arms Control, which has
tracked the procurement activities of Catic in the United
States.
Catic and its lawyers declined to answer any questions
about the grand jury investigation, which, one witness said,
is still in the early stages of taking testimony. Catic is
based in Beijing, outside the reach of the grand jury, but
records from its subsidiary in Southern California have been
subpoenaed, Administration officials said.
A spokesman for McDonnell Douglas, Larry McCracken, said,
``At this point, since these matters are being looked at by
the United States Attorney's Office, we have no comment other
than to say that McDonnell Douglas has not done anything
illegal.''
McDonnell Douglas, an aerospace company based in St. Louis
that has agreed to merge with its longtime competitor, the
Boeing Company, discovered the diversion in Nanchang in early
1995 and reported it promptly to Commerce Department
officials. Commerce Department officials say the unusual
conditions they attached at the last minute to the approval
for the license enabled them to have the diverted equipment
placed under tighter supervision at a civilian location in
China.
But that took almost a year. By then, the criminal inquiry
by the United States Attorney's Office in Washington and the
United States Customs Service had begun. In late spring of
1996, several weeks after the grand jury had subpoenaed
records from McDonnell Douglas, a company official tried
to obtain the sensitive satellite photos of the Nanchang
military site, intelligence officials said.
The request was eventually denied, but the question of why
the company official sought the photos has become part of the
investigation, intelligence officials said.
The decision to approve the export of the machine equipment
pitted national security concerns against economic interests
and, in the end, the latter prevailed.
``For the Administration, this has been a difficult
decision, weighting jobs against counterproliferation,'' said
Adm. Bill Center, who represented the Joint Chiefs of Staff
in 1994 in deliberations within the Government about the
proposed sale.
Admiral Center said, ``The Joint Chiefs of Staff initially
opposed the sale on national security grounds.'' But after
considerable discussion, led by White House officials, ``all
of us concluded that if McDonnell Douglas didn't sell it,
others would, and we wouldn't accomplish anything by saying
no.''
Secretary Brown, who died in a plane crash in Croatia last
year, intended to raise the issue of economic and security
trade-offs when he visited China in 1994. A draft of one of
his speeches said, ``Sales of sensitive technologies have
been made despite public and political opposition.''
Some sales to China may wind up being examined as part of
the various inquiries into possible ties between the Chinese
and the Clinton Administration.
The House Government Reform and Oversight Committee, the
principal panel looking at campaign finances, has requested
the use of Customs investigators who have specialized in
export diversion cases, Congressional and Administration
officials said.
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