Congressional Record, Volume 144 Issue 80 (Thursday, June 18, 1998)

[Congressional Record Volume 144, Number 80 (Thursday, June 18, 1998)]
[House]
[Pages H4748-H4772]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

ESTABLISHING THE SELECT COMMITTEE ON U.S. NATIONAL SECURITY AND
MILITARY/COMMERCIAL CONCERNS WITH THE PEOPLE'S REPUBLIC OF CHINA

Mr. SOLOMON. Mr. Speaker, pursuant to House Resolution 476, I call up
the resolution (H. Res. 463), to establish the Select Committee on U.S.
National Security and Military/Commercial Concerns With the People's
Republic of China, and ask for its immediate consideration.
The Clerk read the title of the resolution.
The SPEAKER pro tempore. The resolution is considered read for
amendment.
The text of House Resolution 463 is as follows:

J. Res. 463

Resolved,

SECTION 1. ESTABLISHMENT.

There is hereby created the Select Committee on U.S.
National Security and Military/Commercial Concerns With the
People's Republic of China, (hereafter in this Act referred
to as the ``Select Committee''). The Select Committee may sit
and act during the present Congress at such times and places
within the United States, including any Commonwealth or
possession thereof, or in any other country, whether the
House is in session, has recessed, or has adjourned, as it
shall deem appropriate for the completion of its work.

SEC. 2. JURISDICTION.

(a) In General.--The Select Committee shall conduct a full
and complete inquiry regarding the following matters and
report such findings and recommendations, including those
concerning the amendment of existing law or the enactment of
new law, to the House as it considers appropriate:
(1) The transfer of technology, information, advice, goods,
or services that may have contributed to the enhancement of
the accuracy, reliability, or capability of nuclear-armed
intercontinental ballistic missiles or other weapons of the
People's Republic of China, or that may have contributed to
the enhancement of the domestic or foreign intelligence
capabilities of the People's Republic of China.
(2) The transfer of technology, information, advice, goods,
or services that may have contributed to the manufacture of
weapons of mass destruction, missiles, or other weapons or
armaments by the People's Republic of China.
(3) The effect of any transfer or enhancement referred to
in paragraphs (1) or (2) on regional security and the
national security of the United States, its friends, and its
allies.
(4) The conduct of the executive branch of the United
States Government with respect to the transfers or
enhancements referred to in paragraphs (1) or (2), and the
effect of that conduct on the national security of the United
States, its friends, and its allies.
(5) The conduct of defense contractors, weapons
manufacturers, satellite manufacturers, and other private or
government-owned commercial firms with respect to the
transfers or enhancements referred to in paragraphs (1) or
(2).
(6) The enforcement of United States law, including
statutes, regulations, or executive orders, with respect to
the transfers or enhancements referred to in paragraphs (1)
or (2).
(7) Any effort by the Government of the People's Republic
of China or any other person or entity to influence any of
the foregoing matters through political contributions,
bribery, influence-peddling, or otherwise.
(8) Decision-making within the executive branch of the
United States Government with respect to any of the foregoing
matters.
(9) Any effort to conceal or withhold information or
documents relevant to any of the foregoing matters or to
otherwise obstruct justice, or to obstruct the work of the
Select Committee or any other committee of the Congress in
connection with those matters.
(10) All matters relating directly or indirectly to any of
the foregoing matters.
(b) Permitting Reports To Be Made to House in Secret
Session.--Any report to the House pursuant to this section
may, in the Select Committee's discretion, be made under the
provisions of rule XXIX of the Rules of the House of
Representatives.

SEC. 3. COMPOSITION; VACANCIES.

(a) Composition.--The Select Committee shall be composed of
8 Members of the House to be appointed by the Speaker of the
House of Representatives, one of whom he shall designate as
Chairman. Service on the Select Committee shall not count
against the limitations on committee service in clause
6(b)(2) of rule X.
(b) Vacancies.--Any vacancy occurring in the membership of
the Select Committee shall be filled in the same manner in
which the original appointment was made.

SEC. 4. RULES APPLICABLE TO SELECT COMMITTEE.

(a) Quorum.--One-third of the members of the Select
Committee shall constitute a quorum for the transaction of
business other than the reporting of a matter, which shall
require a majority of the committee to be actually present,
except that the Select Committee may designate a lesser
number, but not less than two, as a quorum for the purpose of
holding hearings to take testimony and receive evidence.
(b) Applicability of House Rules.--The Rules of the House
of Representatives applicable to standing committees shall
govern the Select Committee where not inconsistent with this
resolution.
(c) Rules of Select Committee.--The Select Committee shall
adopt additional written rules, which shall be public, to
govern its procedures, which shall not be inconsistent with
this resolution or the Rules of the House of Representatives.

SEC. 5. CLASSIFIED INFORMATION.

No employee of the Select Committee or any person engaged
by contract or otherwise to perform services for or at the
request of such committee shall be given access to any
classified information by such committee unless such employee
or person has--
(1) agreed in writing and under oath to be bound by the
rules of the House (including the jurisdiction of the
Committee on Standards of Official Conduct and of the Select
Committee as to the security of such information during and
after the period of his employment or contractual agreement
with the Select Committee); and
(2) received an appropriate security clearance as
determined by the Select Committee in consultation with the
Director of Central Intelligence.
The type of security clearance to be required in the case of
any such employee or person shall, within the determination
of the Select Committee in consultation with the Director of
Central Intelligence, be commensurate with the sensitivity of
the classified information to which such employee or person
will be given access by such committee.

SEC. 6. LIMITS ON DISCLOSURE OF INFORMATION.

The Select Committee shall formulate and carry out such
rules and procedures as it deems necessary to prevent the
disclosure, without the consent of the person or persons
concerned, of information in the possession of such committee
which unduly infringes upon the privacy or which violates the
constitutional rights of such person or persons. Nothing
herein shall be construed to prevent such committee from
publicly disclosing any such information in any case in which
such committee determines that national interest in the
disclosure of such information clearly outweighs any
infringement on the privacy of any person or persons.

SEC. 7. PROCEDURES FOR HANDLING INFORMATION.

(a) The Select Committee may, subject to the provisions of
this section, disclose publicly any information in the
possession of such committee after a determination by such
committee that the public interest would be served by such
disclosure. Whenever committee action is required to disclose
any information under this section, the committee shall meet
to vote on the matter within five days after any member of
the committee requests such a vote. No member of the Select
Committee shall disclose any information, the disclosure of
which requires a committee vote, prior to a vote by the
committee on the question of the disclosure of such
information or after such vote except in accordance with this
section. In any case in which the Select Committee votes to
disclose publicly any information, which has been classified
under established security procedures, which has been
submitted to it by the executive branch, and which the
executive branch requests be kept secret, the Select
Committee shall submit such classified information to the
Permanent Select Committee on Intelligence.

[[Page H4749]]

(b)(1) As set forth in clause 7(b) of rule XLVIII, in any
case in which the Permanent Select Committee on Intelligence
votes to disclose publicly any information submitted pursuant
to subsection (a), which has been classified under
established security procedures, which has been submitted to
the Select Committee by the executive branch, and which the
executive branch has requested be kept secret, the Permanent
Select Committee on Intelligence shall notify the President
of such vote.
(2) The Permanent Select Committee on Intelligence may
disclose publicly such information after the expiration of a
five-day period following the day on which notice of such
vote is transmitted to the President, unless, prior to the
expiration of such five-day period, the President, personally
in writing, notifies the Permanent Select Committee on
Intelligence that he objects to the disclosure of such
information, provides his reasons therefor, and certifies
that the threat to the national interest of the United States
posed by such disclosure is of such gravity that it outweighs
any public interest in the disclosure.
(3) If the President, personally, in writing, notifies the
Permanent Select Committee on Intelligence of his objections
to the disclosure of such information as provided in
paragraph (2), the Permanent Select Committee on Intelligence
may, by majority vote, refer the question of this disclosure
of such information with a recommendation thereon to the
House for consideration. The Permanent Select Committee on
Intelligence shall not publicly disclose such information
without leave of the House.
(4) Whenever the Permanent Select Committee on Intelligence
votes to refer the question of disclosure of any information
to the House under paragraph (3), the chairman of the
Permanent Select Committee on Intelligence shall, not later
than the first day on which the House is in session following
the day on which the vote occurs, report the matter to the
House for its consideration.
(5) If within four calendar days on which the House is in
session, after such recommendation is reported, no motion has
been made by the chairman of the Permanent Select Committee
on Intelligence to consider, in closed session, the matter
reported under paragraph (4), then such a motion will be
deemed privileged and may be made by any Member. The motion
under this paragraph shall not be subject to debate or
amendment. When made, it shall be decided without intervening
motion, except one motion to adjourn.
(6) If the House adopts a motion to resolve into closed
session, the Speaker shall then be authorized to declare a
recess subject to the call of the Chair. At the expiration of
such recess, the pending question, in closed session, shall
be, ``Shall the House approve the recommendation of the
Permanent Select Committee on Intelligence?''
(7) After not more than two hours of debate on the motion,
such debate to be equally divided and controlled by the
chairman and ranking minority member of the Permanent Select
Committee on Intelligence, or their designees, the previous
question shall be considered as ordered and the House,
without intervening motion except one motion to adjourn,
shall immediately vote on the question, in open session but
without divulging the information with respect to which the
vote is being taken. If the recommendation of the Permanent
Select Committee on Intelligence is not agreed to, the
question shall be deemed recommitted to the Permanent Select
Committee on Intelligence for further recommendation.
(c)(1) No information in the possession of the Select
Committee relating to the lawful intelligence or
intelligence-related activities of any department or agency
of the United States which has been classified under
established security procedures and which the Select
Committee, the Permanent Select Committee on Intelligence, or
the House pursuant to this section, has determined should not
be disclosed shall be made available to any person by a
Member, officer, or employee of the House except as provided
in paragraph (2).
(2) The Select Committee shall, under such regulations as
the committee shall prescribe, make any information described
in paragraph (1) available to any other committee or any
other Member of the House and permit any other Member of the
House to attend any hearing of the committee which is closed
to the public. Whenever the Select Committee makes such
information available (other than to the Speaker), the
committee shall keep a written record showing, in the case of
any particular information, which committee or which Members
of the House received such information. No Member of the
House who, and no committee which, receives any information
under this paragraph, shall disclose such information except
in a closed session of the House.
(d) The Committee on Standards of Official Conduct shall
investigate any unauthorized disclosure of intelligence or
intelligence-related information by a Member, officer, or
employee of the House in violation of subsection (c) and
report to the House concerning any allegation which it finds
to be substantiated.
(e) Upon the request of any person who is subject to any
such investigation, the Committee on Standards of Official
Conduct shall release to such individual at the conclusion of
its investigation a summary of its investigation, together
with its findings. If, at the conclusion of its
investigation, the Committee on Standards of Official Conduct
determines that there has been a significant breach of
confidentiality or unauthorized disclosure by a Member,
officer, or employee of the House, it shall report its
findings to the House and recommend appropriate action such
as censure, removal from committee membership, or expulsion
from the House, in the case of a Member, or removal from
office or employment or punishment for contempt, in the case
of an officer or employee.

SEC. 8. TRANSFER OF INFORMATION TO SELECT COMMITTEE.

Any committee of the House of Representatives having
custody of records, data, charts, and files concerning
subjects within the jurisdiction of the Select Committee
shall furnish the originals or copies of such materials to
the Select Committee. In the case of the Permanent Select
Committee on Intelligence, such materials shall be made
available pursuant to clause 7(c)(2) of rule XLVIII.

SEC. 9. INFORMATION GATHERING.

(a) In General.--The Select Committee is authorized to
require, by subpoena or otherwise, the attendance and
testimony of such witnesses, the furnishing of such
information by interrogatory, and the production of such
books, records, correspondence, memoranda, papers, documents,
calendars, recordings, electronic communications, data
compilations from which information can be obtained, tangible
objects, and other things and information of any kind as it
deems necessary, including all intelligence materials
however classified, White House materials, and materials
pertaining to unvouchered expenditures or concerning
communications interceptions or surveillance.
(b) Subpoenas, Depositions and Interrogatories.--Unless
otherwise determined by the Select Committee, the Chairman,
upon consultation with the ranking minority member, or the
Select Committee may--
(1) authorize and issue subpoenas;
(2) order the taking of depositions, interrogatories, or
affidavits under oath or otherwise; and
(3) designate a member or staff of the Select Committee to
conduct any deposition.
(c) International Authorities.--Unless otherwise determined
by the Select Committee, the Chairman of the Select
Committee, upon consultation with the ranking minority member
of the Select Committee, or the Select Committee may--
(1) order the taking of depositions and other testimony,
under oath or otherwise, anywhere outside the United States;
and
(2) make application for issuance of letters rogatory, and
request through appropriate channels, other means of
international assistance, as appropriate.
(d) Handling of Information.--Information obtained under
the authority of this section shall be--
(1) considered as taken by the Select Committee in the
District of Columbia, as well as the location actually taken;
and
(2) considered to be taken in executive session.

SEC. 10. TAX RETURNS.

Pursuant to sections 6103(f)(3) and 6104(a)(2) of the
Internal Revenue Code of 1986, for the purpose of
investigating the subjects set forth in this resolution and
since information necessary for this investigation cannot
reasonably be obtained from any other source, the Select
Committee shall be specially authorized to inspect and
receive for the tax years 1991 through 1998 any tax return,
return information, or other tax-related material, held by
the Secretary of the Treasury, related to individuals and
entities named by the Select Committee as possible
participants, beneficiaries, or intermediaries in the
transactions under investigation. As specified by section
6103(f)(3) of the Internal Revenue Code of 1986, such
materials and information shall be furnished in closed
executive session.

SEC. 11. ACCESS TO INFORMATION OF THE SELECT COMMITTEE.

The Select Committee shall provide other committees and
Members of the House with access to information and
proceedings, consistent with clause 7(c)(2) of rule XLVIII,
except that the Select Committee may direct that particular
matters or classes of matter shall not be made available to
any person by its members, staff, or others, or may impose
any other restriction. The Select Committee may require its
staff to enter nondisclosure agreements, and its chairman, in
consultation with the ranking minority member, may require
others, such as counsel for witnesses, to do so. The
Committee on Standards of Official Conduct may investigate
any unauthorized disclosure of such classified information by
a Member, officer, or employee of the House or other covered
person upon request of the Select Committee. If, at the
conclusion of its investigation, the Committee on Standards
of Official Conduct determines that there has been a
significant unauthorized disclosure, it shall report its
findings to the House and recommend appropriate sanctions for
the Member, officer, employee, or other covered person
consistent with clause 7(e) of rule XLVIII and any committee
restriction, including nondisclosure agreements. The Select
Committee shall, as appropriate, provide access to
information and proceedings to the Speaker and the minority
leader and their appropriately cleared and designated staff.

SEC. 12. COOPERATION OF OTHER ENTITIES.

(a) Cooperation of Other Committees.--The Select Committee
may submit to any

[[Page H4750]]

standing committee specific matters within its jurisdiction
and may request that such committees pursue such matters
further.
(b) Cooperation of Other Federal Entities.--The Chairman of
the Select Committee, upon consultation with the ranking
minority member, or the Select Committee may request
investigations, reports, and other assistance from any agency
of the executive, legislative, and judicial branches of the
Federal Government.

SEC. 13. ACCESS AND RESPONSE TO JUDICIAL PROCESS.

In addition to any applications to court in response to
judicial process that may be made in behalf of the House by
its counsel, the Select Committee shall be authorized to
respond to any judicial or other process, or to make any
applications to court, upon consultation with the Speaker
consistent with rule L.

SEC. 14. ADMINISTRATIVE MATTERS.

(a) Personnel.--The Chairman, upon consultation with the
ranking minority member, may employ and fix the compensation
of such clerks, experts, consultants, technicians, attorneys,
investigators, clerical and stenographic assistants, and
other appropriate staff as the Chairman considers necessary
to carry out the purposes of this resolution. Detailees from
the executive branch or staff of the House or a joint
committee, upon the request of the Chairman of the Select
Committee, upon consultation with the ranking minority
member, shall be deemed staff of the Select Committee to
the extent necessary to carry out the purposes of this
resolution.
(b) Payment of Expenses.--(1) The Select Committee may
reimburse the members of its staff for travel, subsistence,
and other necessary expenses incurred by them in the
performance of the duties vested in the Select Committee.
(2) Not more than $2,500,000 are authorized for expenses of
the Select Committee for investigations and studies,
including for the procurement of the services of individual
consultants or organizations thereof, and for training of
staff, to be paid out of the applicable accounts of the House
of Representatives upon vouchers signed by the Chairman and
approved in the manner directed by the Committee on House
Oversight.

SEC. 15. APPLICABILITY OF OTHER LAWS TO SELECT COMMITTEE.

The Select Committee shall be deemed a committee of the
House for all purposes of the rules of the House of
Representatives and shall be deemed a committee for all
purposes of law, including, but not limited to, section
202(f) of the Legislative Reorganization Act of 1946 (2
U.S.C. 72a(f)), sections 102 and 104 of the Revised Statutes
(2 U.S.C. 192 and 194), sections 1001, 1505, 1621, 6002, and
6005 of title 18, United States Code, section
502(b)(1)(B)(ii) of the Mutual Security Act of 1954 (22
U.S.C. 1754(b)(1)(B)(ii)), and section 734 of title 31,
United States Code.

SEC. 16. DISPOSITION OF RECORDS.

At the conclusion of the existence of the Select Committee,
all records of the Select Committee shall be transferred to
other committees, or stored by the Clerk of the House, as
directed by the Select Committee, consistent with applicable
rules and law concerning classified information.

The SPEAKER pro tempore. Pursuant to House Resolution 476, the
amendment in the nature of a substitute printed in the resolution is
adopted.
The text of the amendment in the nature of a substitute is as
follows:

Resolved,

SECTION 1. ESTABLISHMENT.

There is hereby created the Select Committee on U.S.
National Security and Military/Commercial Concerns With the
People's Republic of China, (hereafter in this resolution
referred to as the ``Select Committee''). The Select
Committee may sit and act during the present Congress at such
times and places within the United States, including any
Commonwealth or possession thereof, or in any other country,
whether the House is in session, has recessed, or has
adjourned, as it shall deem appropriate for the completion of
its work.

SEC. 2. JURISDICTION.

(a) In General.--The Select Committee shall conduct a full
and complete inquiry regarding the following matters and
report such findings and recommendations, including those
concerning the amendment of existing law or the enactment of
new law, to the House as it considers appropriate:
(1) The transfer of technology, information, advice, goods,
or services that may have contributed to the enhancement of
the accuracy, reliability, or capability of nuclear-armed
intercontinental ballistic missiles or other weapons of the
People's Republic of China, or that may have contributed to
the enhancement of the intelligence capabilities of the
People's Republic of China.
(2) The transfer of technology, information, advice, goods,
or services that may have contributed to the manufacture of
weapons of mass destruction, missiles, or other weapons or
armaments by the People's Republic of China.
(3) The effect of any transfer or enhancement referred to
in paragraphs (1) or (2) on regional security and the
national security of the United States.
(4) The conduct of the executive branch of the United
States Government with respect to the transfers or
enhancements referred to in paragraphs (1) or (2), and the
effect of that conduct on regional security and the national
security of the United States.
(5) The conduct of defense contractors, weapons
manufacturers, satellite manufacturers, and other private or
government-owned commercial firms with respect to the
transfers or enhancements referred to in paragraphs (1) or
(2).
(6) The enforcement of United States law, including
statutes, regulations, or executive orders, with respect to
the transfers or enhancements referred to in paragraphs (1)
or (2).
(7) Any effort by the Government of the People's Republic
of China or any other person or entity to influence any of
the foregoing matters through political contributions,
commercial arrangements, or bribery, influence-peddling, or
other illegal activities.
(8) Decision-making within the executive branch of the
United States Government with respect to any of the foregoing
matters.
(9) Any effort to conceal or withhold information or
documents relevant to any of the foregoing matters or to
obstruct justice, or to obstruct the work of the Select
Committee or any other committee of the House of
Representatives in connection with those matters.
(10) All matters relating directly or indirectly to any of
the foregoing matters.
(b) Permitting Reports To Be Made to House in Secret
Session.--Any report to the House pursuant to this section
may, in the Select Committee's discretion, be made under the
provisions of rule XXIX of the Rules of the House of
Representatives.

SEC. 3. COMPOSITION; VACANCIES.

(a) Composition.--The Select Committee shall be composed of
9 or fewer Members of the House to be appointed by the
Speaker of the House of Representatives, one of whom he shall
designate as Chairman. Service on the Select Committee shall
not count against the limitations on committee service in
clause 6(b)(2) of rule X.
(b) Vacancies.--Any vacancy occurring in the membership of
the Select Committee shall be filled in the same manner in
which the original appointment was made.

SEC. 4. RULES APPLICABLE TO SELECT COMMITTEE.

(a) Quorum.--One-third of the members of the Select
Committee shall constitute a quorum for the transaction of
business other than the reporting of a matter, which shall
require a majority of the committee to be actually present,
except that the Select Committee may designate a lesser
number, but not less than 2, as a quorum for the purpose of
holding hearings to take testimony and receive evidence.
(b) Applicability of House Rules.--The Rules of the House
of Representatives applicable to standing committees shall
govern the Select Committee where not inconsistent with this
resolution.
(c) Rules of Select Committee.--The Select Committee shall
adopt additional written rules, which shall be public, to
govern its procedures, which shall not be inconsistent with
this resolution or the Rules of the House of Representatives.

SEC. 5. CLASSIFIED INFORMATION.

The type of security clearance to be required in the case of
any such employee or person shall, within the determination
of the Select Committee in consultation with the Director of
Central Intelligence, be commensurate with the sensitivity of
the classified information to which such employee or person
will be given access by such committee.

SEC. 6. LIMITS ON DISCLOSURE OF INFORMATION.

SEC. 7. PROCEDURES FOR HANDLING INFORMATION.

[[Page H4751]]

Committee shall submit such classified information to the
Permanent Select Committee on Intelligence.
(b)(1) As set forth in clause 7(b) of rule XLVIII, in any
case in which the Permanent Select Committee on Intelligence
votes to disclose publicly any information submitted pursuant
to subsection (a), which has been classified under
established security procedures, which has been submitted to
the Select Committee by the executive branch, and which the
executive branch has requested be kept secret, the Permanent
Select Committee on Intelligence shall notify the President
of such vote.
(2) The Permanent Select Committee on Intelligence may
disclose publicly such information after the expiration of a
five-day period following the day on which notice of such
vote is transmitted to the President, unless, prior to the
expiration of such five-day period, the President, personally
in writing, notifies the Permanent Select Committee on
Intelligence that he objects to the disclosure of such
information, provides his reasons therefor, and certifies
that the threat to the national interest of the United States
posed by such disclosure is of such gravity that it outweighs
any public interest in the disclosure.
(3) If the President, personally, in writing, notifies the
Permanent Select Committee on Intelligence of his objections
to the disclosure of such information as provided in
paragraph (2), the Permanent Select Committee on Intelligence
may, by majority vote, refer the question of this disclosure
of such information with a recommendation thereon to the
House for consideration. The Permanent Select Committee on
Intelligence shall not publicly disclose such information
without leave of the House.
(4) Whenever the Permanent Select Committee on Intelligence
votes to refer the question of disclosure of any information
to the House under paragraph (3), the chairman of the
Permanent Select Committee on Intelligence shall, not later
than the first day on which the House is in session following
the day on which the vote occurs, report the matter to the
House for its consideration.
(5) If within four calendar days on which the House is in
session, after such recommendation is reported, no motion has
been made by the chairman of the Permanent Select Committee
on Intelligence to consider, in closed session, the matter
reported under paragraph (4), then such a motion will be
deemed privileged and may be made by any Member. The motion
under this paragraph shall not be subject to debate or
amendment. When made, it shall be decided without intervening
motion, except one motion to adjourn.
(6) If the House adopts a motion to resolve into closed
session, the Speaker shall then be authorized to declare a
recess subject to the call of the Chair. At the expiration of
such recess, the pending question, in closed session, shall
be, ``Shall the House approve the recommendation of the
Permanent Select Committee on Intelligence?''
(7) After not more than two hours of debate on the motion,
such debate to be equally divided and controlled by the
chairman and ranking minority member of the Permanent Select
Committee on Intelligence, or their designees, the previous
question shall be considered as ordered and the House,
without intervening motion except one motion to adjourn,
shall immediately vote on the question, in open session but
without divulging the information with respect to which the
vote is being taken. If the recommendation of the Permanent
Select Committee on Intelligence is not agreed to, the
question shall be deemed recommitted to the Permanent Select
Committee on Intelligence for further recommendation.
(c)(1) No information in the possession of the Select
Committee relating to the lawful intelligence or
intelligence-related activities of any department or agency
of the United States which has been classified under
established security procedures and which the Select
Committee, the Permanent Select Committee on Intelligence, or
the House pursuant to this section, has determined should not
be disclosed shall be made available to any person by a
Member, officer, or employee of the House except as provided
in paragraph (2).
(2) The Select Committee shall, under such regulations as
the committee shall prescribe, make any information described
in paragraph (1) available to any other committee or any
other Member of the House and permit any other Member of the
House to attend any hearing of the committee which is closed
to the public. Whenever the Select Committee makes such
information available (other than to the Speaker), the
committee shall keep a written record showing, in the case of
any particular information, which committee or which
Members of the House received such information. No Member
of the House who, and no committee which, receives any
information under this paragraph, shall disclose such
information except in a closed session of the House.
(d) The Committee on Standards of Official Conduct shall
investigate any unauthorized disclosure of intelligence or
intelligence-related information by a Member, officer, or
employee of the House in violation of subsection (c) and
report to the House concerning any allegation which it finds
to be substantiated.
(e) Upon the request of any person who is subject to any
such investigation, the Committee on Standards of Official
Conduct shall release to such individual at the conclusion of
its investigation a summary of its investigation, together
with its findings. If, at the conclusion of its
investigation, the Committee on Standards of Official Conduct
determines that there has been a significant breach of
confidentiality or unauthorized disclosure by a Member,
officer, or employee of the House, it shall report its
findings to the House and recommend appropriate action such
as censure, removal from committee membership, or expulsion
from the House, in the case of a Member, or removal from
office or employment or punishment for contempt, in the case
of an officer or employee.

SEC. 8. TRANSFER OF INFORMATION TO SELECT COMMITTEE.

SEC. 9. INFORMATION GATHERING.

(a) In General.--The Select Committee is authorized to
require, by subpoena or otherwise, the attendance and
testimony of such witnesses, the furnishing of such
information by interrogatory, and the production of such
books, records, correspondence, memoranda, papers, documents,
calendars, recordings, electronic communications, data
compilations from which information can be obtained, tangible
objects, and other things and information of any kind as it
deems necessary, including all intelligence materials however
classified, White House materials, and materials pertaining
to unvouchered expenditures or concerning communications
interceptions or surveillance.
(b) Subpoenas, Depositions and Interrogatories.--Unless
otherwise determined by the Select Committee, the Chairman,
upon consultation with the ranking minority member, or the
Select Committee may--
(1) authorize and issue subpoenas;
(2) order the taking of depositions, interrogatories, or
affidavits under oath or otherwise; and
(3) designate a member or staff of the Select Committee to
conduct any deposition.
(c) International Authorities.--Unless otherwise determined
by the Select Committee, the Chairman of the Select
Committee, upon consultation with the ranking minority member
of the Select Committee, or the Select Committee may--
(1) authorize the taking of depositions and other
testimony, under oath or otherwise, anywhere outside the
United States; and
(2) make application for issuance of letters rogatory, and
request through appropriate channels, other means of
international assistance, as appropriate.
(d) Handling of Information.--Information obtained under
the authority of this section shall be--
(1) considered as taken by the Select Committee in the
District of Columbia, as well as the location actually taken;
and
(2) considered to be taken in executive session.

SEC. 10. TAX RETURNS.

Pursuant to sections 6103(f)(3) and 6104(a)(2) of the
Internal Revenue Code of 1986, for the purpose of
investigating the subjects set forth in this resolution and
since information necessary for this investigation cannot
reasonably be obtained from any other source, the Select
Committee shall be specially authorized to inspect and
receive for the tax years 1988 through 1998 any tax return,
return information, or other tax-related material, held by
the Secretary of the Treasury, related to individuals and
entities named by the Select Committee as possible
participants, beneficiaries, or intermediaries in the
transactions under investigation. As specified by section
6103(f)(3) of the Internal Revenue Code of 1986, such
materials and information shall be furnished in closed
executive session.

SEC. 11. ACCESS TO INFORMATION OF THE SELECT COMMITTEE.

SEC. 12. COOPERATION OF OTHER ENTITIES.

(a) Cooperation of Other Committees.--The Select Committee
may submit to any standing committee specific matters within
its jurisdiction and may request that such committees pursue
such matters further.
(b) Cooperation of Other Federal Entities.--The Chairman of
the Select Committee, upon consultation with the ranking
minority member, or the Select Committee may request
investigations, reports, and other assistance from any agency
of the executive, legislative, and judicial branches of the
Federal Government.

SEC. 13. ACCESS AND RESPONSE TO JUDICIAL PROCESS.

In addition to any applications to court in response to
judicial process that may be made in

[[Page H4752]]

behalf of the House by its counsel, the Select Committee
shall be authorized to respond to any judicial or other
process, or to make any applications to court, upon
consultation with the Speaker consistent with rule L.

SEC. 14. ADMINISTRATIVE MATTERS.

(a) Personnel.--The Chairman, upon consultation with the
ranking minority member, may employ and fix the compensation
of such clerks, experts, consultants, technicians, attorneys,
investigators, clerical and stenographic assistants, and
other appropriate staff as the Chairman considers necessary
to carry out the purposes of this resolution. Detailees from
the executive branch or staff of the House or a joint
committee, upon the request of the Chairman of the Select
Committee, upon consultation with the ranking minority
member, shall be deemed staff of the Select Committee to the
extent necessary to carry out the purposes of this
resolution.
(b) Payment of Expenses.--(1) The Select Committee may
reimburse the members of its staff for travel, subsistence,
and other necessary expenses incurred by them in the
performance of the duties vested in the Select Committee.
(2) Not more than $2,500,000 are authorized for expenses of
the Select Committee for investigations and studies,
including for the procurement of the services of individual
consultants or organizations thereof, and for training of
staff, to be paid out of the applicable accounts of the House
of Representatives upon vouchers signed by the Chairman and
approved in the manner directed by the Committee on House
Oversight.

SEC. 15. APPLICABILITY OF OTHER LAWS TO SELECT COMMITTEE.

SEC. 16. DISPOSITION OF RECORDS.

The SPEAKER pro tempore. The gentleman from New York (Mr. Solomon)
and the gentleman from Texas (Mr. Frost) each will control 30 minutes.
The Chair recognizes the gentleman from New York (Mr. Solomon).
Mr. SOLOMON. Mr. Speaker, I yield myself such time as I may consume.
Today the Committee on Rules brings to the floor this resolution
establishing a Select Committee of the House on United States National
Security and Military/Commercial Concerns With the People's Republic of
China.
Beginning in April of this year, Mr. Speaker, the New York Times has
focused on the somewhat sordid history of the transfer of American
satellite technology to Communist China. These press accounts have
asserted, Mr. Speaker, that American national security has been
severely damaged, and campaign contributions may have been a factor in
the decisions made.
Mr. Speaker, there has been bipartisan commentary in this Congress
and in our national public debate agreeing that there is a pressing
need to get to the bottom of this matter that does affect the national
security of our country.
The resolution before the House will establish a select committee to
answer, among other things, did the transfer of technology contribute
to the enhancement of the accuracy of nuclear armed intercontinental
ballistic missiles of the People's Republic of China, missiles that
right this minute are aimed at the United States of America?
Did these transfers contribute to the manufacture of weapons of mass
destruction by the People's Republic of China?
What effect did these transfers have on U.S. national security?
Was there any effort by the People's Republic of China or other
person or entity to influence these matters through political
contributions, commercial arrangements, or bribery, influence peddling
or other illegal activities?
Keep in mind, Mr. Speaker, we ought to remember the Foreign Corrupt
Practices Act, because it may very well be involved in this situation
here today.
Mr. Speaker, every Member of this House would agree that these are
critical and serious questions which deserve to have truthful answers.
Mr. Speaker, this resolution is brought forward in a bipartisan
spirit, a development which brings great credit I think to this House.
I applaud the work of the gentleman from California (Mr. Cox) sitting
to my right, the proposed chairman of this select committee, and the
gentleman from Washington (Mr. Dicks), again, one of the most respected
and admired Members of this House, the proposed ranking member of the
Select Committee.
These two honorable gentlemen worked out a package of bipartisan
improvements to the legislation that I introduced several days ago,
which the Committee on Rules was pleased to incorporate during the
markup. We have taken all of their suggestions so that there is nothing
controversial in this resolution before us right now.
Now, Mr. Speaker and Members, every American citizen is deeply
concerned about nuclear proliferation around this world, whether it be
in India, whether it be in Pakistan, in North Korea, in other rogue
states like Iran, Iraq and Libya. Mr. Speaker, they are concerned that
in the People's Republic of China, that in the last decade has been
able to develop and now deploy intercontinental ballistic missiles,
according to our estimates and that of the press, 13 of the 18 are
aimed at the United States of America.
Mr. Speaker, as we all know, President Clinton is fond of defending
his ``commerce-at-any-cost'' policy toward China by saying that he is
merely continuing the policy of previous Republican Presidents. Mr.
Speaker, last Tuesday we heard from Richard Allen, who knows a little
bit about previous Republican policy. He was in the Nixon
administration during the opening of China in 1972, whether that was
right or wrong, and was National Security Adviser to President Reagan
during the early years of his presidency.
Mr. Allen said that given today's changed context, and this is very,
very important, given today's changed context, it is patently obvious
to him that President Nixon or President Reagan or President Bush would
have caused this policy to study the cumulative impact of these massive
transfers of technology to a country like China.
Mr. Allen also offered this common-sense piece of wisdom that has so
far eluded the Clinton administration. He said, quote, ``If a policy
does not work any longer, you reevaluate it, you adjust it according to
those new circumstances.''
Also, and this is terribly, terribly important, we heard from Jim
Woolsey, who was President Clinton's first CIA director. What I found
stunning about his testimony, Mr. Speaker, was the array of different
materials and technologies that we have recently begun selling to
China. This was his testimony: ``In addition to satellites, we are now
giving China aircraft machine tools that can be used to construct
military aircraft; we are giving them supercomputers that can be used
to build and test nuclear weapons with more accuracy than they even
have today. We are giving them high-temperature furnaces that also have
nuclear uses. We are giving them encryption technology and cruise
missile technology,'' all of which is very ominous, Mr. Speaker, to the
future of this country. This is absolutely incredible in light of what
is going on in the world today with nuclear proliferation around this
world.
Just 2 days ago a headline appeared noting that China not only
continues to help Iran, but also Libya. Here is the article. This
article is from the Washington Times and was repeated in the New York
Times and in the Washington Post. It says, ``China Assists Iran, Libya
on Missile Sales.''
Mr. Speaker, Libya, as Members are well aware, has nuclear weapons
programs, and the assistance continues after innumerable promises by
the Chinese that they have stopped these transfers.
Mr. Speaker, another headline recently was that North Korea has
thumbed its nose at the Clinton administration and at this country and
said that it too would continue to export its military technology, much
of which has been provided by China, to its rogue friends around the
world.
Mr. Speaker, we know our technology transfer policies, our
nonproliferation policies, and our overall China policies are bankrupt.
They have to be changed. What we do not know, Mr. Speaker, at this
point is exactly how we got into this mess and whether and how all of
these developments are connected.

[[Page H4753]]

{time} 1400

We also do not know the full extent of the national security damage
done to the United States of America. And I pointed out, this is not
just me standing here saying so, Mr. Speaker.
Here is a cartoon that appeared in a local newspaper and these are
typical of cartoons appearing around the country. It is a picture of
the White House and up in the corner it is President Clinton saying,
``Relax, Hillary, I have convinced the Chinese to return the
technology.'' Well, Mr. Speaker, then there is a picture of an
intercontinental ballistic missile; that is the technology that is
being returned to the United States of America at the White House. That
is how serious this matter is.
Mr. Speaker, all of these revelations that I have alluded to have
appeared in mainstream press accounts across this country and, Mr.
Speaker, at this point I insert in the Record a series of articles from
the New York Times and other publications that document what we know so
far.

[From the New York Times, Apr. 4, 1998]

Companies Are Investigated For Aid to China on Rockets

(By Jeff Gerth with Raymond Bonner)

A Federal grand jury is investigating whether two American
companies illegally gave China space expertise that
significantly advanced Beijing's ballistic missile program,
according to Administration officials.
But the officials said the criminal inquiry was dealt a
serious blow two months ago when President Clinton quietly
approved the export to China of similar technology by one of
the companies under investigation.
The decision was opposed by Justice Department officials,
who argued that it would be much more difficult to prosecute
the companies if the Government gave its blessing to the
deal, the officials said.
Under investigation, the officials said, are Loral Space
and Communications of Manhattan and Hughes Electronics, a Los
Angeles-based division of the General Motors Corporation. The
companies denied wrongdoing, but declined to discuss the
investigation.
Loral has numerous business deals with China and close ties
to the White House. Its chairman and chief executive, Bernard
L. Schwartz, was the largest personal contributor to the
Democratic National Committee last year.
Loral's vice president for government relations, Thomas B.
Ross, said Mr. Schwartz had not spoken about the matter with
Mr. Clinton or any other Administration official.
The Federal inquiry stems from a 1996 incident in which a
Chinese rocket carrying aloft a satellite built by Loral
exploded shortly after liftoff. The two companies took part
in an independent review of the failure, and reported to the
Chinese on what went wrong.
Those exchanges, officials believe, may have gone beyond
the sharing of information that the companies had been
permitted, giving the Chinese crucial assistance in improving
the guidance systems of their rockets. The technology needed
to put a commercial satellite in orbit is similar to that
which guides a long-range nuclear missile to its target.
In February, with the investigation of this incident well
under way, Mr. Clinton gave Loral permission to launch
another satellite on a Chinese rocket and provide the Chinese
with the same expertise that is at issue in the criminal
case, officials said.
A senior official said the Administration recognized the
sensitivity of the decision, but approved the launching
because the investigation had reached no conclusions and
because Loral had properly handled subsequent launchings. The
Administration, he said, could still take administrative
action against the companies if they were found to have
violated export laws in their earlier dealings with the
Chinese.
Michael D. McCurry, the White House spokesman, said the
launching that President Clinton approved in February ``will
not contribute to Chinese military capabilities'' because
Loral has agreed to ``stringent safeguards'' to prevent the
unauthorized transfer of technology.
Emery Wilson, public relations manager for Hughes Space and
Communications, a division of Hughes Electronics, said the
company had not been notified of any Federal criminal
investigation.
``In response to a letter from the State Department,'' Mr.
Wilson said, ``we conducted a thorough review and concluded
that no Hughes employee had engaged in the unauthorized
export of controlled technology or equipment.''
The Administration has been hoping to reach a broader
agreement with Beijing that would make it much easier to
launch American satellites on China's rockets. Mr. Clinton is
to visit China this summer in the first Presidential trip to
the country since the suppression of the pro-democracy
movement in the 1989 Tiananmen Square massacre.
There are huge commercial interests at stake. A host of
companies, from cellular telephone networks to international
television conglomerates, are waiting in line for low-cost
satellites to be sent into orbit. An important bottleneck
facing the companies is a shortage of rocket systems
available to launch satellites.
China is eager to offer its low-cost--but not always
reliable--services.
For American companies, there is a significant
complication. All American satellites sent into orbit by
China's rockets require Presidential approval, a waiver of
the sanctions imposed after the Tiananmen massacre. Congress
must be told of each waiver. Thus far, Presidents Bush and
Clinton have issued 11 waivers for satellite launchings.
The policy under consideration by the Clinton
Administration would end the case-by-case waivers and would
treat future launchings of American satellites like any other
export of sensitive technology, which require Government
licenses.
Critics in Congress argue that Mr. Clinton is putting
commercial interests ahead of national security. They caution
that China has yet to prove it will abide by previous
pledges it has made not to share missile technology with
countries like Iran.
Few nations can deliver intercontinental ballistic
missiles. China has lagged because, among other reasons, it
lacks the guidance technology, also used for satellites, that
allows multiple warheads to be sent from a single missile.
President Clinton signed the waiver to allow the Loral
satellite launching on Feb. 18. The waiver states that the
deal is ``in the national interest.''
``We are more engaged with China,'' Mr. McCurry said. ``One
area of that engagement has been commercial satellite
technology, which we perceive to be in our interests as well
as that of China's.''
But law-enforcement officials argued against the waiver,
saying the approval jeopardized their investigation because
it sanctioned the export of essentially the same guidance
expertise involved in the possibly illegal transfer two years
ago, Administration officials say.
Administration officials said the inquiry is focused on the
events following the Feb. 15, 1996, explosion of a Chinese
rocket carrying a $200 million Loral satellite seconds after
liftoff at the Xichang Satellite Launch Center in Sichuan
Province, in southern China.
After the explosion, the Chinese asked two American
companies to help conduct an independent study of what went
wrong. The team was led by Loral and included two experts
from Hughes, according to Hughes.
According to Administration officials, the American experts
provided crucial data and information to the Chinese to
prevent future accidents. Later, Loral gave a copy of the
written report to the State Department, which licenses the
export of defense-related items.
Government officials immediately began to assess whether
there had been a security breach. Last year, a criminal
inquiry was begun by the United States Customs Service and
the Department of Justice, officials said.
Under Federal export rules, American companies are supposed
to take careful precautions to safeguard classified
technology when their satellites are launched by Chinese
rockets.
Satellites are shipped to China in sealed containers, and
only American officials can mount them in the nose cones of
the launching rockets. The Commerce Department approves the
export of the satellites. But the more sensitive support
activities must be approved by the State Department.
That process is meant to insure tight controls over the
testing, repair and maintenance of the satellite so the
Chinese cannot learn related classified information.
The State Department license issued several years ago for
the Loral satellite was silent on the issue of what role, if
any, the American experts could play in an analysis of a
failed launching.
After United States companies took part in more than one
study of failed Chinese launchings, the Federal Government
changed its regulations and now requires companies to obtain
a separate license to take a role in any accident review, an
Administration official said.
____

[From the New York Times, Apr. 13, 1998]

U.S. Business Role in Policy on China is Under Question

(By Jeff Gerth)

In the 1992 election, many of America's aerospace
manufacturers backed Bill Clinton. But when President Clinton
took office, he immediately disappointed some of them on a
key issue, barring them from launching their most lucrative
satellites on China's low-cost rockets.
The aerospace companies' counterattack was vehement--and
effective. After a lobbying campaign that included appeals to
the President by C. Michael Armstrong, then the chief
executive of Hughes Electronics, Mr. Clinton gradually came
to take the industry's side.
But there was an important caveat: The companies had to
keep a tight rein on sophisticated technology sought by the
Chinese military.
So in May 1997 the Administration was jolted by a
classified Pentagon report concluding that scientists from
Hughes and Loral Space and Communications had turned over
expertise that significantly improved the reliability of
China's nuclear missiles, officials said.
The report, whose existence has been secret, prompted a
criminal investigation of the companies, which officials said
was undermined this year when Mr. Clinton approved Loral's
export to China of the same

[[Page H4754]]

information about guidance systems. Loral's chairman was the
largest personal donor to the Democratic Party last year.
An examination of the Administration's handling of the
case, based on interviews with Administration officials and
industry executive, illustrates the competing forces that
buffet Mr. Clinton on China policy. In this instance, the
President's desire to limit the spread of missile technology
was balanced against the commercial interests of powerful
American businesses, many of which were White House allies
and substantial supporters of the Democratic Party.
``From the Chinese point of view, this was the key case
study on how the Administration would operate on contentious
issues,'' an Administration expert on China said. The
message, the official added, was that Administration policy
on issues like the spread of weapons and human rights abuses
``could be reversed by corporations.''
The White House denied any political interference in the
issue.
``I am certainly not aware that our policy has been
influenced by domestic political considerations,'' said Gary
Samore, the senior director for nonproliferation and export
controls at the National Security Council. ``From where I
sit, this has been handled as a national security issue:
seeking to use China's interest in civilian space cooperation
as leverage to obtain nonproliferation goals.''
The Administration's China policy has come under intense
scrutiny in the last year. Congressional investigators have
been examining whether China sought to influence policy
through illegal campaign contributions to Democratic
candidates in 1996. The connection, first suggested in
intelligence reports and echoed by Senator Fred Thompson, the
Tennessee Republican who led hearings on campaign finance,
was never proved.
The handling of the satellite case raises questions about
the influence of American contributors on China policy,
according to officials.

2 Companies Tilt Toward Democrats

Since 1991, the aerospace industry has divided its
political contributions equally between Democrats and
Republicans. In the same period, however, Loral and Hughes
tilted toward the Democratic Party, giving $2.5 million to
Democratic candidates and causes and $1 million to the
Republicans.
Administration officials say the contributions played no
role in the decisions to permit China to launch American
satellites.
``The Government has to balance risks: the risk in not
letting American companies get their satellites launched by
the Chinese, which would reduce our high-tech advantages, and
the inherent risks of technology transfer,'' said James P.
Rubin, the State Department spokesman.
``That's why we impose such strict safeguards, and we are
determined to investigate and use our laws to prevent that
possibility,'' Mr. Rubin said.

Waivers Required After Tiananmen

The criminal investigation of Hughes and Loral has its
roots in 1989, when sanctions were imposed after the massacre
of pro-democracy demonstrators at Tiananmen Square, requiring
a Presidential waiver for satellite launchings. Eleven such
waivers have been granted by President Clinton and his
predecessor, George Bush.
But in late 1992, American intelligence discovered that
Chinese companies had sold missile technology to Pakistan,
raising tensions on the subcontinent.
In the first months of Mr. Clinton's Presidency, Democrats
and Republicans in Congress pressed the Administration to
take action. Mr. Clinton responded with sanctions that barred
American companies from sending military goods to any of
the Chinese concerns involved in the Pakistan deal.
The move had the effect of halting several pending and
future American satellite deals because the Chinese rocket-
launching company was one of those under sanctions.
Mr. Armstrong of Hughes, a subsidiary of the General Motors
Corporation, wasted no time in getting the President's
attention. He wrote two blunt letters in September and
October 1993 that reminded Mr. Clinton of his support for
several Presidential policy initiatives like the North
American Free Trade Agreement, officials said.
He bemoaned his company's loss of business to foreign
competitors and requested Mr. Clinton's personal involvement.
Hughes's biggest loss, the company says, was the opportunity
for a joint satellite manufacturing plant in China, which the
Chinese awarded to a European competitor.

Clinton Confronts Department Tussle

A key issue was whether Hughes satellites were civilian or
military, a murky question in the export control laws. If the
satellites were labeled commercial, the sanctions invoked
over the Pakistan deal did not apply. Mr. Armstrong told Mr.
Clinton, officials said, that Hughes satellites should not be
considered military because their technology did not have
military applications.
Soon after the letters, Mr. Clinton assured Mr. Armstrong
in an open meeting that he was trying to resolve the tussle
between the State Department, which licensed military exports
and wanted to keep authority over satellites, and the
Commerce Department, which licensed all other exports and was
on the side of the satellite industry.
``I'm trying to get on top of this to decide what to do,''
Mr. Clinton told Mr. Armstrong.
At about the same time, the Administration gave signals
that it was moving toward the industry's position. After one
signal, Mr. Armstrong sent a letter to a senior White House
official relaying a positive reaction from Chinese officials,
White House officials said.
In early January 1994, the President sent another positive
signal--what Hughes officials then called a ``a good first
step.'' Three satellites were lableded as civilian, including
one slightly modified Hughes satellite, which allowed their
launchings to proceed.
Mr. Clinton's decision helped the industry. But the
satellite makers wanted a broader decision that made the
Commerce Department the primary licensing authority for
virtually all satellites. The Commerce Department weighs the
economic consequences when it considers an export license.
The State Department looks at security concerns.
In 1994, Loral's chairman and chief executive, Bernard L.
Schwartz, went to China with Commerce Secretary Ron Brown.
Mr. Brown helped Loral close a mobile telephone satellite
network deal in Beijing.
A few weeks later, the President's top political aide,
Harold Ickes, wrote a memo to Mr. Clinton in which he said
Mr. Schwartz ``is prepared to do anything he can for the
Administration.''
In December 1994, the President selected Mr. Armstrong to
head his Export Council.
And the sanctions stemming from the Pakistan sale were
lifted in late 1994 as China promised to curb missile sales
to other countries.
Still, the satellite industry had not achieved a major
objective. So in 1995, Mr. Armstrong sent another letter to
Mr. Clinton, signed by Mr. Schwartz, arguing that the
Commerce Department should become the primary licensing
authority for satellite exports, an industry executive said.
(Mr. Armstrong, who recently became the chief executive of
AT&T, declined through a spokeswoman to comment.)
The debate not only affected national security but also had
enormous commercial implications. The businesses that rely on
satellites are highly competitive, and European companies
were more than willing to take advantage of China's low-cost
services. Without the Chinese, American companies faced long
waits to get their satellites sent into orbit because of a
shortage of rockets. Satellite technology is crucial to an
increasing number of businesses, from cellular telephone
networks to global broadcast conglomerates.

Chinese Rocket For Loral Crashes

Finally in March 1996, Mr. Clinton shifted major licensing
responsibilities for almost all satellites to the Commerce
Department. The State Department retained control over a few
highly sophisticated satellites as well as any sensitive
support activities, or technical assistance, in connection
with civilian satellites.
The industry and the Chinese applauded the action. But the
events that followed a failed launching in China immediately
raised questions about whether the new policy sent a wrong
signal.
On Feb. 15, 1996, a Chinese rocket carrying a $200 million
Loral satellite crashed 22 seconds after liftoff at the
Xichang Satellite Launching Center in southern China.
Chinese officials needed to figure out what went wrong. By
April an outside review commission, headed by Loral, was
assembled to help the Chinese study the accident. It included
two scientists from Hughes.
On May 10, the commission completed a preliminary report,
based on over ``200 pages of data, analysis evaluation and
reports,'' documents show. It found that the cause of the
accident was an electrical flaw in the electronic flight
control system.
But the report, which was promptly shared with the Chinese,
discussed other sensitive aspects of the rocket's guidance
and control systems, which is an area of weakness in China's
missile programs, according to Government and industry
officials.
The State Department learned about the report and made
contact with Loral.
Loral, in what officials said was a cooperative effort,
provided the review commission's report and a long letter
explaining what happened. Loral told other commission
members, including the two Hughes scientists, to retrieve
all copies of the report because of the serious security
concerns of the Government, officials said,
But the two Hughes employees believed that there was no
legal obligation to comply with the request, officials also
said. In late May, Hughes received a letter from the State
Department charging that the transfer of information was a
violation of the arms export control laws, according to
officials. Loral received no such letter.
One year later, the Pentagon completed its damage
assessment of the incident. It concluded, officials said,
that ``United States national security has been harmed.''
The Pentagon report prompted a criminal investigation into
Loral and Hughes by the Justice Department and the Customs
Service. The companies say their employees have acted
properly, but they decline to discuss the matter.
One key issue is whether the data turned over to the
Chinese required a State Department license and, if so,
whether the company officials were aware of that fact. The
criminal inquiry has found evidence that several days before
the review committee had its first meeting with Chinese
officials, Loral executives were told by their security
advisers that any sharing of information required

[[Page H4755]]

a State Department license, according to Administration
officials. Loral never sought a license, but it may have
sounded out the State Department.
An industry official said Loral had immediately told the
State Department about the review commission meeting with the
Chinese but had received no reply.

More High-Tech Data Exported Recently

Whatever the evidence, criminal charges may never be
brought because Mr. Clinton approved the export to China by
Loral of similar satellite guidance information two months
ago. He acted despite the strong opposition of the Justice
Department, whose officials argued that the approval would
seriously undercut any criminal case.
The required notice to Congress by the President of his
action was sent during a recess.
Administration officials say the decision was politically
sensitive but correct because no wrongdoing had been proven
and Loral had subsequently acted responsibly.
Since the inquiry began, Beijing and Washington have been
exploring even more space cooperation.
Last fall President Jiang Zemin visited the United States
and stopped at a Hughes site to talk about satellites. In
advance of Mr. Clinton's trip to China in June, the
Administration is seeking a broader agreement with Beijing on
space cooperation.
But the chairman of the House International Relations
Committee, Benjamin A. Gilman, Republican of New York, says
the Administration should provide a ``thorough review'' of
the Hughes-Loral case to Congress before it goes ahead with a
plan to expedite approvals for American satellite launchings
by China.
____

[From the New York Times, May 15, 1998]

Democrat Fund-Raiser Said to Detail China Tie

(By Jeff Gerth)

(This article is based on reporting by Jeff Gerth, David Johnston and
Don Van Natta and was written by Mr. Gerth.)

A Democratic fund-raiser has told Federal investigators he
funneled tens of thousands of dollars from a Chinese military
officer to the Democrats during President Clinton's 1996 re-
election campaign, according to lawyers and officials with
knowledge of the Justice Department's campaign finance
inquiry.
The fund-raiser, Johnny Chung, told investigators that a
large part of the nearly $100,000 he gave to Democratic
causes in the summer of 1996--including $80,000 to the
Democratic National Committee--came from China's People's
Liberation Army through a Chinese lieutenant colonel and
aerospace executive whose father was Gen. Liu Huaqing, the
officials and lawyers said.
General Liu was then not only China's top military
commander but also a member of the leadership of the
Communist Party.
Mr. Chung said the aerospace executive, Liu Chao-ying, told
him the source of the money. At one fund-raiser to which Mr.
Chung gained admission for her, she was photographed with
President Clinton.
A special adviser to the White House counsel, Jim Kennedy,
said today, ``We had no knowledge about the source of Mr.
Chung's money or the background of his guest. In hindsight it
was clearly not appropriate for Chung to bring her to see the
President.''
Mr. Chung's account, coupled with supporting documents like
bank records, is the first direct evidence obtained by the
Justice Department that elements of the Chinese Government
made illegal contributions to the Democratic Party. Under
American law, foreign governments are prohibited from
contributing to political campaigns.
While the amount described is a tiny part of the $194
million that Democrats raised in 1996, investigators regard
the identification of Ms. Liu as a breakthrough in their long
search for confirmation of a ``China Plan.'' The hunt was
prompted after American intelligence intercepted telephone
conversations suggesting that Beijing considered covertly
influencing the American elections.
Senator Fred Thompson, Republican of Tennessee and chairman
of the Senate committee investigating campaign finance,
sought evidence of the plan, but Mr. Chung's account did not
come until the committee issued its report this year.
Tonight, the Federal Bureau of Investigation briefed Senate
staff members about Mr. Chung's cooperation, according to
officials.
Mr. Chung, a Southern California businessman, began
cooperating with investigators after he pleaded guilty in
March to campaign-related bank and tax fraud. He is the first
defendant in the Justice Department inquiry to agree to
cooperate.
It is not clear whether other Chinese officials or
executives were involved in the purported payments by Ms.
Liu, or what her motivation or the Chinese military's might
have been. At the time, President Clinton was making it
easier for American civilian communication satellites to be
launched by Chinese rockets, a key issue for the Chinese army
and for Ms.Liu's company, which sells missiles for the
military and also has a troubled space subsidiary.
The President's decision was valuable to Ms. Liu because it
enabled her company to do more business with American
companies, but it has also been sought by American aerospace
corporations, including Loral Space and Communications and
the Hughes Electronics Corporation, a subsidiary of the
General Motors Corporation, seeking to do more business in
China. It is not known, however, whether anyone in the
Democratic Party or the Clinton Administration had reason to
suspect the source of the contributions from Mr. Chung.
A lawyer for Mr. Chung, Brian A. Sun, declined to comment
on his client's conversations with investigators, citing his
client's sealed plea agreement with the Justice Department.
``I'm shocked that sources at the Justice Department would
attribute anything like that to my client.''
Mr. Chung has denied being an agent of the Chinese
Government. ``Nor did Mr. Chung ever try to lobby the
American Government on any type of issue involving technology
or anything else,'' Mr. Sun said.
A National Security Council spokesman, Eric Rubin, said,
``It is ludicrous to suggest there was any influence on the
determination of U.S. policy on this matter.'' He said he did
not know whether any executives from Ms. Liu's company
expressed an interest in the issue.
Ms. Liu did not return a message left with her office
today.
Mr. Chung's revelations have opened an avenue of inquiry
leading in a diplomatically sensitive direction: next month,
Mr. Clinton goes to Beijing, where he hopes to announce
increased space cooperation between China and the United
States.
A representative of the Chinese Government denied that
Beijing was behind the purported contributions. ``China has
always abided by the laws and regulations in this country,''
said Yu Shu-ning, a press counselor for the Chinese Embassy.
``We have nothing to do whatsoever with political
contributions in this country.''
Mr. Chung, an American who was born in Taiwan, owned a
floundering facsimile company in Torrance, Calif. He became
involved with the Democratic Party in early 1995 through
Asian-American contacts at the White House and was known for
trying to use his connections in Washington with Chinese
Government officials and executives.
Despite being labeled a ``hustler'' by one Presidential
aide in 1995, Mr. Chung managed to visit the White House at
least 49 times. He and his company contributed $366,000 to
the Democratic National Committee--most of it before he
met Ms. Liu. The full amount was later returned after
questions were raised about Democratic fund-raising.
A Democratic National Committee spokesman, Richard W. Hess,
said, ``We did not know and had no way of knowing the source
of his funds.''
Mr. Chung met Ms. Liu in June 1996 in Hong Kong. She was
not only a lieutenant colonel in the military, but a senior
manager and vice president in charge of international trading
for China Aerospace International Holdings Ltd., according to
the company's 1996 annual report.
The company is the Hong Kong arm of China Aerospace
Corporation, a state-owned jewel in China's military
industrial complex with interests in satellite technology,
missile sales and rocket launches.
Ms. Liu's father, General Liu, was China's senior military
officer, and as vice chairman of the powerful Central
Military Commission was in charge of China's drive to
modernize the People's Liberation Army by selling weapons to
other countries and using the hard currency to acquire
Western technology. In that role, he oversaw his country's
missile deals.
In addition, General Liu was a member of the Standing
Committee of the Politburo of the Communist Party, the very
top circle of political leadership in China. He retired from
his official positions last fall at the time of the Party's
15th Congress.
China Aerospace sells satellites, launches them and owns a
large part of a Hong Kong satellite operator, but the
financial viability of many of these ventures depends on
American satellites. In 1996 President Clinton made it easier
for American satellites to be launched by Chinese rockets.
The decision was announced in March but due to delays did not
take effect until election day.
As Ms. Liu began her relationship with Mr. Chung, her
company and father were trying to fix China's troubled rocket
program. That spring, China Aerospace had brought in outside
experts, including officials from Hughes and Loral to help
analyze why a launch the previous February had failed. The
Pentagon later concluded that the outside review harmed
American national security by advancing China's rocket and
missile capabilities. Both companies denied wrongdoing.
In 1991 and 1993 the United States barred all American
companies from doing business with two China Aerospace units
that had made illegal missile sales to Pakistan. In each
instance, Mr. Liu was assistant to the president of the
sanctioned company.
Writing about who in China may have benefited from the 1991
missile deal, former Secretary of State James A. Baker 3d, in
his memoirs, said, ``In all probability, several senior
government and party officials or their families stood to
gain from the performance of those contracts.''
The missile deals were part of General Liu's strategy of
selling Chinese weapons to other countries to raise money to
acquire Western technology.
``Liu was a proponent of P.L.A. modernization who was very
much interested in obtaining Western technology,'' said
retired Rear Adm. Eric A. McVadon, the American defense
attache in Beijing in the early 1990's. He said Mr. Liu
constantly rebuffed American concerns about China's weaponry
sales.
Those concerns were front and center in 1996, when General
Liu was still in charge of

[[Page H4756]]

the P.L.A. They included China's sale of missiles to Iran and
of nuclear equipment to Pakistan, as well as its own
bellicose military maneuvers near Taiwan.
Ms. Liu, Mr. McVadon recalled, was a ``gladhander'' who
``brokered deals.'' In 1990 she was granted a visa to visit
the United States as a representative of a China Aerospace
subsidiary.
At the first meeting between Mr. Chung and Ms. Liu in June
1996, Mr. Chung is said to have told investigators, Ms. Liu
told him she was interested in again visiting the United
States. Soon learning that Mr. Chung could arrange meetings
with the President, she expressed an interest in meeting Mr.
Clinton.
Mr. Chung helped Ms. Liu obtain a visa on July 11, 1996,
according to a law-enforcement official. Five days later, he
wrote the Democratic National Committee that he wanted to
bring Ms. Liu and a Chinese medical executive to a July 22
fund-raising dinner to be held at the Brentwood, Calif., home
of the financier Eli Broad.
Both of his guests' names were placed on the guest list
after Mr. Chung wrote a check for $45,000 to the Democratic
National Committee on July 19. A week later, Mr. Chung set up
a California corporation for Ms. Liu and himself, records
show.
Ms. Liu arrived in Los Angeles on July 21, and the next day
Mr. Chung accompanied her to two fund-raising events attended
by Mr. Clinton, according to a law-enforcement official. The
first was an early evening $1,000-per-plate gala at the
Beverly Hilton.
Later that night, Mr. Chung and Ms. Liu attended a $25,000-
per-couple dinner at Mr. Broad's home that raised more than
$1.5 million for the Democrats. The President was
photographed with Ms. Liu, a routine courtesy at such events.
Mr. Sun, Mr. Chung's lawyer, said, ``I don't think she was
any different from any of his business contacts--they thought
Johnny was influential and someone they would like to know as
they furthered their business dealings in the United
States.''
The previous year, photos from another Chung visit with Mr.
Clinton had caused a problem. The President had expressed
concerns about some of Mr. Chung's Chinese business clients--
unrelated to Ms. Liu--whom the fund-raiser brought to a March
1995 radio address by Mr. Clinton.
Mr. Clinton's director of Oval Office operations, Nancy
Hernreich, in testimony taken by Senate investigators, said
Mr. Clinton told her later the visit shouldn't have happened.
She took that to mean that Mr. Clinton thought Mr. Chung's
clients were ``inappropriate foreign people.''
____

[From the New York Times, May 17, 1998]

How Chinese Won Rights to Launch Satellites for U.S.

(By Jeff Gerth and David E. Sanger)

On Oct. 9, 1995, Secretary of State Warren Christopher
ended a lengthy debate within the Clinton Administration by
initialing a classified order that preserved the State
Department's sharp limits on China's ability to launch
American-made satellites aboard Chinese rockets.
Both American industry and state-owned Chinese companies
had been lobbying for years to get the satellites off what is
known as the ``munitions list,'' the inventory of America's
most sensitive military and intelligence-gathering
technology. But Mr. Christopher sided with the Defense
Department, the intelligence agencies and some of his own
advisers, who noted that commercial satellites held
technological secrets that could jeopardize ``significant
military and intelligence interests.''
There was one more reason not to ease the controls, they
wrote in a classified memorandum. Doing so would ``raise
suspicions that we are trying to evade China sanctions''
imposed when the country was caught shipping weapons
technology abroad--which is what happened in 1991 and 1993
for missile sales to Pakistan.
The Secretary of State's decision to keep satellites on the
munitions list, making it harder for them to be exported, did
not stand for long. Five months later, President Clinton took
the unusual step of reversing it.
Control of export licensing for communications satellites
was shifted to the Commerce Department, then run by Ronald H.
Brown, who was deeply interested in promoting American
businesses overseas and had been one of the Democratic
Party's key fund-raising strategists. Several licenses have
since been approved.
A reconstruction of Mr. Clinton's decision to change the
export control rules, based on interviews and documents,
shows that it followed a turf war between the State and
Commerce Departments, and a broader debate over how to
balance America's security concerns and commercial
competition in the hottest of all the emerging markets.
It also illustrates the intersection of the interests of
both large American donors and surreptitious foreign donors
to the 1996 campaign.
Both American satellite makers and the Chinese were
delighted with the decision because the Commerce Department
has dual responsibilities: licensing sensitive exports and
promoting sales of American goods around the world.
One of the beneficiaries of that decision, it now turns
out, was China Aerospace because its rockets could launch
American satellites. An executive of the state-owned Chinese
company, Liu Chaoying, is said to have provided tens of
thousands of dollars from Chinese military intelligence to
the Democratic Party in the summer of 1996.
Ms. Liu's involvement was described to Federal
investigators recently by Johnny Chung, a Democratic fund-
raiser who says he took $300,000 from Ms. Liu--who is also a
lieutenant colonel in the Chinese military--and donated
almost $100,000 of it to Democratic causes, apparently
keeping the rest for his businesses.
President Clinton's decision was announced in March 1996,
several months before the donations were made. But the actual
change was delayed until the fall.
The White House said it did not know the source of Mr.
Chung's donations and denies that the decision was influenced
by campaign donations, domestic or foreign.
``This was motivated by competitiveness and streamlining
bureaucracy concerns, and nothing else,'' Samuel R. Berger,
Mr. Clinton's national security adviser, said in an interview
two weeks ago.
On Friday, Mr. Berger's spokesman, Eric Rubin, said the
decision was also part of the Administration's China policy,
and specially its effort to encourage China to clamp down on
military exports.
``On many occasions, this was discussed with the Chinese
Government because we believe that policy on satellite
licenses is one of the tools we have to strengthen our
nonproliferation policy,'' Mr. Rubin said.
Mr. Clinton's decision took place after months of tension
with Beijing.
In January reports of China's export of nuclear technology
to Pakistan and missiles to Iran caused considerable concern
in Congress and the Pentagon. In early May, two months after
Mr. Clinton reversed the Secretary of State, the
Administration said China had agreed to curb its missile and
nuclear exports. But that announcement was greeted with
considerable skepticism by Republican critics, including Bob
Dole, who was well on the way to getting the nomination for
President.
During the campaign, the Republicans attacked Mr. Clinton
for failing to curb China's sales of nuclear and missile
technology to other countries.
The satellite decision in March was one element of the
Administration's ``carrot-and-stock-approach to working with
China,'' said James Lilley, a former United States Ambassador
to Beijing.
But in the way business and diplomacy mix in Washington's
dealings with China, the decision also resonated in
boardrooms on both sides of the Pacific. It satisfied the
commercial interests of the American aerospace industry,
which had long sought access to China's low-cost ability to
launch satellites into space, aboard rockets called the Long
March.
And it bolstered China's own commercial interests. Ms.
Liu's parent company, China Aerospace, owns a large piece of
a Hong Kong satellite operator. It also owns the China
Great Wall Industry Corporation, the rocket company that
launches both private satellites and tests and provides
equipment for the missiles in China's nuclear arsenal. It
was Great Wall that the State Department sanctioned in
1991 and 1993 for selling missiles to Pakistan.
Other powerful Chinese state enterprises also had
multibillion-dollar stakes in getting access to American
satellites. Among them was the China International Trade and
Investment Corporation, whose chairman, Wang Jun, gained
unwanted attention in the United States last year when it was
revealed that he attended one of Mr. Clinton's campaign
coffee meetings in the White House. The day of Mr. Wang's
visit, Mr. Clinton, in what Mr. Rubin said was a coincidence,
signed waivers allowing the Chinese to launch four American
satellites--though they were unrelated to the business
interests of China International Trade.
``Any suggestions that these decisions were influenced by
Wang Jun's presence in the U.S. is completely unfounded,''
Mr. Rubin said.
It is not known what motivated Ms. Liu or the Chinese
military to make the donations. Ms. Liu's father, Gen. Liu
Huaqing, was not only China's highest military officer but a
member of the leadership of the Communist Party.
The White House and the Democratic National Committee deny
any knowledge of the source of Mr. Chung's $266,000 in
donations, most predating his connection with Ms. Liu, and
all of which was returned.
But there is no doubt that American companies--partners and
suppliers of China International Trade and China Aerospace--
put enormous pressure on the White House. They were also
important campaign contributors. For example, the chief
executive of Loral Space and Communications gave $275,000
between November 1995 and June 1996 to the Democrats

the precursor: a lobbying effort to persuade bush

China's drive to obtain a steady stream of satellite
technology from the United States preceded the Clinton
Administration's arrival in Washington.
In 1990, just a year after the killings at Tiananmen
Square, officials from China Aerospace and the Chinese
Government approached Mr. Lilley, the American Ambassador,
pressing for President Bush to waive restrictions enacted in
the aftermath of Tiananmen that barred China from launching
American satellites.
``They hit me very hard,'' Mr. Lilley recalled recently.
``It was a prestige national

[[Page H4757]]

program. It was putting China on the map as the big space
country of the 21st century.''
Mr. Bush, who become America's first permanent
representative in Communist China in 1974, granted a waiver
that allowed a launching on one of China's Long March
rockets. In 1992, a number of Senators--including Al Gore,
then still a Senator from Tennessee--wrote to the Bush
Administration warning that China was using the launchings to
``gain foreign aerospace technology that would be otherwise
unavailable to it.''
In the last days of the 1992 Presidential campaign, Mr.
Gore made the waivers an issue, contending that President
Bush ``has permitted five additional American-built
satellites to be launched by the Chinese.''
``President Bush really is an incurable patsy for those
dictators he sets out to coddle,'' Mr. Gore said in a speech
at the Goddard Space Flight Center in Greenbelt, Md.

the argument: business leaders pressure clinton

Almost as soon as Mr. Clinton took office, business leaders
began their campaign to drastically change his views about
China.
Both Chinese and American companies were working to get
satellites off the State Department's munitions list. The
rules for exporting goods that are on the list are
particularly tough. Congress must be notified 30 days in
advance. Moreover, the State Department considers only
nonproliferation issues and defers to the Pentagon's
judgments.
In contrast, the Commerce Department's export-control
administration solicits a host of views and must weigh the
effects of its decisions on America's competitive position.
Mr. Christopher's aides also noted in their 1995 classified
memorandum that ``U.S. firms remain concerned there could be
additional sanctions imposed on China precluding future
munitions licenses,'' exactly the kind of sanctions that had
been only recently lifted for China Aerospace's subsidiaries.
And there was a lot at stake: an estimated 14 commercial
communications satellite launchings a year worldwide, costing
several hundred million dollars apiece.
``The business community regarded the inclusion of civilian
satellites on the munitions list as an insult,'' said William
A. Reinsch, the Under Secretary of Commerce for export
control, who fought Mr. Christopher's decision. ``We're the
only country that treats them that way.''
The Chinese also understood that they had a huge stake in
the outcome of the decision. Zuoyi Huang, president of the
California subsidiary of China Great Wall, a part of the
China Aerospace empire, said in an interview that his company
was eager for any changes that would insure easier access to
American technology.
``The license takes time,'' he said. ``You have to get a
waiver from the President. The customers can't wait. It's
just pure commercial use. It's not a military threat to the
United States.''

the review: a decision against and a quick appeal

The arguments came to a head in 1995. C. Michael Armstrong,
then the chief executive of Hughes Electronics and newly
chosen as the head of President Clinton's export council,
asked to meet Mr. Christopher. He urged that satellites,
which his company produces, no longer be treated as military
goods.
The Secretary of State promised that he would conduct a
detailed review in consultation with the Department of
Defense, the C.I.A. and the National Security Agency and the
Department of Commerce.
But the majority of the interagency group quickly found
itself at odds with the aerospace industry. A major issue was
how to protect encryption equipment, which is built into a
satellite and interprets instructions from ground controllers
who manipulate the satellite once it is in orbit. Similar
devices are used to communicate with American spy satellites,
and the Pentagon and intelligence agencies worried that
anyone who could crack the code could take control of the
satellites themselves.
On Aug. 17, 1995, a memorandum prepared for the interagency
group noted that the chief executive of a satellite company
told Mr. Christopher that ``once it is embedded in the
satellite, the encryption device has no military
significance.'' Thus, the industry argued, there was little
risk that the Chinese would get their hands on the encryption
devices--especially because American military officials are
supposed to watch the satellites with care when they are in
Chinese hands.
But, the memorandum went on, ``the national security
position'' is that ``the nature of the device itself,'' not
its location, ``should be used to determine whether it must
be controlled as a military item.''
The encryption issue was one of the main reasons the
interagency group--over the objections of the Commerce
Department--recommended that satellites remain on the
munitions list. Mr. Christopher concurred. Soon after Mr.
Christopher put his initials on the decision memorandum,
Commerce Secretary Ronald H. Brown appealed the decision to
the President.

the turnaround: the commerce dept. wins a turf battle

The debate surrounding the appeal did not heat up for four
months. The nature of the arguments that went to the White
House is still unclear: many of the documents remain
classified. But those that have been reviewed by The New York
Times show that the White House and the Commerce Department
began communicating again about the issue on Feb. 8, 1996,
two days after President Clinton broke a backlog of
applications for launchings by China, by approving four of
them that day.
Mr. Clinton signed those waivers the same day that Wang
Jun, the man who was often referred to during the campaign
finance investigations as a ``Chinese arms dealer,'' visited
Washington. His company, the China International Trade and
Investment Corporation, has a multibillion-dollar stake in
one of Hong Kong's largest satellite companies.
That same day, Mr. Wang met with Mr. Brown, at his
expansive office in the Commerce Department. And that
evening, Mr. Wang attended a coffee at the White House, an
event Mr. Clinton later called ``clearly inappropriate.''
Others at the coffee said Mr. Wang never spoke during the
session.
By mid-February, for reasons that are still murky, there
seemed to be some urgency at the White House to decide
whether to reverse Mr. Christopher's decision, shifting
satellite export licensing to the Commerce Department.
A Feb. 15 State Department memorandum talks about speeding
up the process because ``the Administration wanted to wrap
this up.''
In the end, the State Department relented. Participants in
the final debate said that the President concluded that the
technology could be protected through the Commerce
Department, just as the department protects supercomputers
and other sensitive technologies.
The President's decision was announced on March 14.
Commerce officials, who had just won one of Washington's
nastiest turf wars, were jubilant.
``Good news,'' officials were told by E-mail. The
electronic message went on to recommend a ``low key'' spin on
the news that would ``not draw attention to the decision.''
Internal commerce Department documents show that officials
were anticipating questions from reporters and Congress about
whether the decision represented an effort to ease technology
transfers to China and remove items from sanctions--some of
the same concerns that figured in Mr. Christopher's decision.
In the days preceding the announcement, China had raised
tensions with its Asian neighbors and the United States to
new heights, firing M-9 ballistic missiles, which carried
dummy warheads, into target zones 30 miles off the shore of
Taiwan.
The March 14 announcement said that regulations putting
into effect the President's decision would be issued within
30 days. But the bureaucratic infighting continued.
Finally, the State Department issued the regulations
shifting most satellite licensing to the Commerce Department.
They were published on Nov. 5, 1996, the day President
Clinton was re-elected.
Correction: A chart last Sunday about China's effort to win
the right to launch American satellites referred incorrectly
to the message conveyed in September and October 1993 to
President Clinton by Michael Armstrong, the chief executive
officer of the Hughes Electronics Corporation, an American
maker of communications satellites. Mr. Armstrong, in letters
to Mr. Clinton, complained that State Department sanctions
against Chinese missile companies hurt his business; he did
not mention the China Aerospace Corporation specifically.
Between 1993 and 1996, the Clinton Administration dropped
its sanctions on China Aerospace, a state-owned Chinese
company, for selling missiles to Pakistan and gave the
company permission to launch private United States
communications satellites, despite some lingering concerns in
the Administration about security.
August 1993--State Department imposes economic sanctions
against subsidiaries of Beijing-based China Aerospace for
selling missiles to Pakistan. The sanctions bar American
companies from doing business with the concerns.
Sept.-Oct. 1993--Michael Armstrong, the chief executive of
Hughes Electronics Corp., tells the President the sanctions
hurt his company because China Aerospace is a low-cost
launcher of satellites.
Nov. 1993--The Administration signals it might ease
satellite licensing procedures and Mr. Armstrong relays to
the White House an encouraging reaction from his contacts in
China.
April 1995--Secretary of State Warren Christopher begins an
interagency review of restrictions on the export of
communications satellites at Mr. Armstrong's urging. The
companies want to see responsibility for the issue shifted to
the Commerce Department.
Oct. 9, 1995--Following the recommendation of the Pentagon,
intelligence agencies and his advisers, Mr. Christopher keeps
satellites under the purview of the State Department. The
Commerce Department appeals this decision to President
Clinton.
Feb. 6, 1996--With the relations between the United States
and China tense over Beijing's military operations and sales,
President Clinton approves the launch of four American
satellites by Chinese rockets.
Mid-February 1996--The White House revives the effort to
ease restrictions on satellite exports, reviewing anew Mr.
Christopher's decision.
March 8-15, 1996--China conducts missile tests near Taiwan,
signalling its displeasure over talk of Taiwanese
independence during Taiwan's elections.

[[Page H4758]]

March 14, 1996--In a low-key announcement, the
Administration says that Mr. Clinton has shifted
responsibility for communications satellites to the Commerce
Department. Regulations, it says, are to be issued in 30
days.
May 3, 1996--Three top satellite executives write to Mr.
Clinton complaining about the delay in issuing the
regulations.
Nov. 5, 1996--The State Department publishes the new
regulations in the Federal Register. President Clinton is re-
elected.
____

[From the New York Times, May 19, 1998]

Satellite Maker Gave Report to China Before Telling U.S.

(By Jeff Gerth)

Washington.--A leading American satellite maker
acknowledged for the first time Monday that a committee
headed by one of its top executives provided a report in 1996
to the Chinese on a failed Chinese rocket, without first
consulting federal officials, and contrary to the company's
own internal policies.
But the company, Space Systems/Loral, a subsidiary of Loral
Space and Communications, based in Manhattan, said it ``does
not believe any of its employees dealing with China acted
illegally or damaged U.S. national security.'' The company
issued a two-page statement, which it called a ``fact
sheet.''
In the statement, Loral said it was cooperating with the
Justice Department, which is investigating whether sensitive
technological information was passed to the Chinese during
industry reviews of an accidental explosion of a Chinese
rocket seconds after liftoff in February 1996.
The criminal inquiry is focusing on whether officials from
Loral and other companies who participated in the review
violated American export control laws.
Loral maintained Monday that no secret or sensitive
information was conveyed to the Chinese. But a classified
Pentagon study concluded the review had helped Chinese
missile capabilities and harmed American security,
administration officials said. The Pentagon study prompted
the Justice Department's inquiry.
In recent days, the Clinton administration's policies on
Chinese-launched American satellites have come under intense
scrutiny because of information that a Chinese military
officer had funneled nearly $100,000 into Democratic campaign
committees during President Clinton's re-election campaign.
The New York Times has reported that lawyers and officials
have said that Johnny Chung, a fund-raiser, provided
information to federal investigators about the Chinese
officer, Lt. Col. Liu Chaoying, who was a senior Hong Kong
executive for China Aerospace, the Chinese conglomerate whose
rocket exploded with a Loral satellite in 1996.
The information provided by Chung, which followed his
pleading guilty to campaign-related bank and tax fraud
charges, has re-ignited Republicans' zeal to investigate
whether the Chinese government tried to influence Clinton
administration policy.
Speaker Newt Gingrich is considering creating a special
select committee to investigate the transfer of advanced
space technology to China, and House Republicans are
threatening to attach amendments to the Pentagon's budget
bill later this week that would bar the sale of commercial
satellites and technology to China.
Loral's statement Monday said that ``no political favors or
benefits of any kind were requested or extended, directly or
indirectly, by any means whatever.''
It also said that the company's chairman, Bernard Schwartz,
who has been one of the largest individual Democratic Party
donors in the last few years, ``was not personally involved
in any aspect of this matter.''
In outlining its involvement with the Chinese rocket,
Loral's statement said insurance companies asked Loral and
other satellite concerns, including the Hughes Electronics
Corp., to review the results of an accident investigation
done by the Chinese.
The outside review was headed by a senior executive at
Space Systems/Loral. The review committee's report shows that
the senior Loral executive had been requested by the
president of China Aerospace, which controls China's
satellite and space enterprises.
In the end, the review committee affirmed what the Chinese
found: ``that a failed solder joint was the most likely cause
of the failure,'' Loral said Monday.
Loral also said that while the 1996 review was under way,
unidentified Loral officials ``discussed the review
committee's work with a number of U.S. officials interested
in China's space program.'' But the company acknowledged that
it had not followed its own procedures.
``Contrary to SS/L's own internal policies, the committee
provided a report to the Chinese before consulting with State
Department export licensing authorities,'' Loral said without
elaborating.
The company has privately told investigators in a report
that Loral's security advisers had told the company to seek
State Department approval before talking to the Chinese but
those instructions were not followed, industry executives and
federal officials said.
Loral has private conceded another mistake: ignoring
license conditions that required Pentagon monitors during the
transmission of any information, the executives and officials
said.
Last February, President Clinton approved the Chinese
launch of another Loral satellite. That license, according to
American officials, explicitly requires separate government
approval to participate in any accident review and
contains stringent safeguards against transfer of any
technology. Administration officials have said that being
under investigation was insufficient grounds to deny Loral
a license.
But the Justice Department opposed the recent presidential
approval for Loral's license, officials said. Department
lawyers feared that the approval would undercut the viability
of a criminal case--if one were to go forward--by creating
the appearance for a jury of government support for Loral's
previous conduct.
Law-enforcement officials also had initial concerns about
some of the licensing language, but those concerns appear to
have been allayed as the inquiry is going forward, officials
said.
The expertise needed to put satellites into orbit is
similar to that used to deliver nuclear warheads. The
overlapping commercial and military uses lie at the heart of
both the criminal inquiry and congressional concern about
Clinton's policies on satellite launches in China.
On Capitol Hill Monday, senior Republicans continued to
call for a broad investigation into whether the transfer of
space technology to China threatened United States security.
Gingrich Monday called on Clinton to delay his trip to
China in June.
The Speaker is also proposing the creation of a special
committee, with five Republicans and three Democrats, and
headed by Rep. Christopher Cox, R-Calif., who served as
deputy counsel in the Reagan administration, said Christina
Martin, Gingrich's spokeswoman.
``The purpose would be to assess whether U.S. policy was
affected by Communist Chinese efforts,'' Ms. Martin said.
But Rep. Richard A. Gephardt of Missouri, the House
democratic leader, argued that the House had several standing
committees that could handle the task.
____

[From the New York Times, June 1, 1998]

The White House Dismissed Warnings on China Satellite Deal

(By Jeff Gerth and John M. Broder)

Washington.--The caution signs made it evident that the
application by Loral Space & Communications to export a
satellite to China earlier this year was anything but
routine.
Justice Department prosecutors warned that allowing the
deal could jeopardize possible prosecution of the company for
an earlier unauthorized technology transfer to Beijing. The
Pentagon reported that Loral had provided ``potentially very
significant help'' to China's military rocket program. And
senior White House aides cautioned that the deal was certain
to spark opposition from critics of the Administration's
nonproliferation and human rights policies toward China.
But the White House pressed ahead, concerned about the
financial costs to Loral of delaying approval of the deal and
certain that it could defend the decision against subsequent
criticism.
Rarely is the public given a detailed look inside the White
House decision-making process on a matter of national
security as sensitive as the export of a satellite to China.
These records ordinarily remain sealed for years, buried
under the Government's strict regime of secrecy.
But documents produced by the White House 10 days ago in
response to a demand from Congress provide an unusually rich
account of the evolution of a Presidential decision in which
numerous warning signals were raised and then dismissed.
According to the records, the February decision by
President Clinton to approve the Loral satellite launching
was treated as an urgent matter not because of its importance
to the national security, but because the company was facing
heavy fines for delay.
Concerns about European competition for the satellite
business and fears that denying the deal would damage the
United States-China relationship overrode words of caution
from other Government agencies.
The presumption throughout was that the deal would be
approved, as had 19 previous applications under Presidents
Clinton and Bush. The documents reflect the White House
staffs search for a defensible rationale for the decision.
Federal and Congressional investigators are now examining
what led the President to risk political embarrassment by
creating the perception that he might be letting Loral--
headed by the Democratic Party's largest campaign
contributor--off the hook in a serious criminal inquiry into
whether Loral executives helped China's missile program.

Decision Traced To a Satellite Crash

Samuel R. Berger, the national security adviser, had a
preemptive answer in the decision memorandum he forwarded to
the President on Feb. 12. The memo briefly noted the Justice
Department's concerns and referred to the possibility that
Loral might have significantly aided China's military rocket
program.
But he urged the President to approve the deal regardless.
``In any case,'' Berger wrote, ``we believe that the
advantages of this project outweigh this risk, and that we
can effectively rebut criticism of the waiver.''
Clinton approved it with his distinctive backward check
mark six days later.
Since 1989, the export of American satellites for launching
on Chinese rockets has

[[Page H4759]]

been suspended as a result of sanctions imposed after the
killings in Tiananmen Square. A deal can go forward only if
the President concludes that the export is in the national
interest and issues a waiver.
President Bush approved all nine waiver requests that
reached this desk; President Clinton routinely followed the
practice in his first four years in office, signing 10
waivers with little internal debate or external controversy.
But the waiver Clinton signed on Feb. 18 was not routine.
The roots of his unusual decision trace back two years when a
Chinese rocket carrying a Loral satellite crashed into a
village seconds after liftoff, killing and injuring dozens of
civilians.
A few months later, Loral led an outside review team to
help the Chinese figure out what had happened. The company
says its officials did nothing wrong. But Loral also
acknowledged serious mistakes in a June 1996 disclosure to
the State Department, including an admission that it allowed
the Chinese to see its lengthy review of the rocket mishap
without prior Federal approval. Such technological assistance
to the Chinese requires prior Government approval, which
Loral had not received.
At virtually the same time that Loral made its disclosure
to the Government, the company was seeking another
Presidential waiver for a satellite. Its chairman, Bernard L.
Schwartz, donated $100,000 to the Democratic Party four weeks
before the waiver application was approved in early July 1996
by Clinton.
It is not known whether Loral's help for the Chinese was
mentioned in the memorandum that went to the President
because the White House has not released documentation on
that decision.
It is known that the State Department had already alleged
in a letter to satellite industry executives that there had
been a violation of American export control laws in the
accident review.
But as of July 1996, no criminal inquiry was under way. The
Justice Department began its investigation only after the
Pentagon completed an assessment of the accident review in
May 1997.
That is the same month Loral applied for its most recent
waiver, for the Chinasat 8 satellite.

Company's Concerns Reach White House

The first notice to the White House of unusual problems
with the Chinasat 8 waiver application came in an early
January memorandum from the State Department detailing the
factors for the President to consider.
Although couched in careful bureaucratic language, the
State Department document made it clear that this was no
routine export license application.
The State Department pointed out that China's transfer of
missile technology to Iran might prohibit the export of the
Loral satellite or any other satellites or related items.
``Moreover'' the State Department memo stated,
``information about unauthorized defense services provided by
Space Systems/Loral and another U.S. firm to China's Long
March 3B Launch Vehicle'' could lead to imposition of harsh
sanctions against the company.
But the State Department and other agencies nonetheless
recommended granting the waiver, because the deal would
enhance the United States' leadership in commercial
telecommunications, provide an incentive for China to adhere
to international nonproliferation rules and improve trade
ties with Beijing.
After virtually no debate at the White House, the State
Department memorandum was rewritten as a decision paper for
the President.
The State Department's concern about technology transfers
to Iran appeared nowhere in the decision document, but a new
element is inserted in the first and in most subsequent
drafts. The President must act quickly, the draft states; any
delay will cost Loral money.
``Due to severe contractual penalties which Loral will
incur if it cannot begin technical discussions with the
Chinese by next week, we recommend that you take action on
this issue by January 20,'' read the first draft of the
Presidential memorandum, dated Jan. 13.
A day earlier, Loral officials had made known to the White
House their frustration at the slow Government response to
their waiver application, which was submitted in May 1997.
A Loral letter found in White House files stated that
unless the approval is granted within a week, the launching
scheduled for November, would be delayed by several months,
costing the company at least $6 million. Any such delay would
give the Chinese grounds for canceling the project, which
would cost Loral $20 million, the company warned.
``Our competitors in Europe,'' Loral officials complained,
``do not suffer delays due to export licensing or legal
complications.''
The company's concerns clearly were heard at the White
House.
A senior aide at the National Security Council, Maureen E.
Tucker, repeatedly pressed for a rapid decision in forwarding
early drafts of the Presidential decision paper to associates
at the council.
She described the memorandum and accompanying documents as
``a very quick turnaround package for which I am seeking your
clearance by tomorrow,'' she wrote on Jan. 13.
By Jan. 20, one frustrated aide scrawled on a draft of the
memo, ``Needs to go to POTUS today!!'' POTUS is the White
House jargon for President of the United States.
But the waiver request was held up by questions from
Berger, who asked his legal aides to research the status of
the Justice Department investigation and determine whether it
would bar approval of the waiver.
Tellingly, Berger asked Gary Samore, the National Security
Council's top weapons aides to research the status of the
Justice Department investigation and determine whether it
would bar approval of the waiver.
Tellingly, Berger asked Gary Samore, the National Security
Council's top weapons proliferation export, in a handwritten
note if the approval can be granted in phases ``to get over
immediate crunch.''
Berger did not ask whether Loral's cooperation with the
Chinese after the 1996 accident would require denial of the
export license. Instead, he wonders in the note to Samore
where there is ``anything we can hang our hat on to
characterize Loral's `offense.' ''
Berger's aides sought advice from officials at the State
Department, who informed them that Loral's offenses appear to
be ``criminal'' and ``knowing.'' Ms. Tucker was told that the
Pentagon investigated Loral's assistance to the Chinese after
the 1996 missile explosion and concluded that the company
provided ``potentially very significant help'' to Beijing's
ballistic missile program.

behind decision to grant a waiver

The White House counsel Charles F. C. Ruff told a Security
Council lawyer that the Justice Department's investigation
mattered less than maintaining close diplomatic and business
relations with China.
``Issue is not [underlined twice] impact on DOJ
litig(ation),'' the Security Council deputy counsel Newell
Highsmith wrote in notes of his conversation with Ruff, ``but
whether bilateral U.S.-China concerns and economic factors
outweigh risk of political embarrassment.''
A principal argument behind Clinton's decision was that it
would be unfair to penalize Loral by denying it a license if
it was under investigation but had not been charged with any
crimes.
The export law allows the President to deny a license if
the license seeker has been indicted or if there is
``reasonable cause to believe'' the license seeker ``has
violated'' United States export control laws. The White House
documents show that some White House and State Department
officials believed the latter, but Administration officials
say they relied on a 1993 State Department memo which said
that companies will be denied licenses only after indictment.
``In an ideal world we would wait until this matter is
resolved,'' Malcolm R. Lee, a National Security Council aide,
told other White House officials in an electronic message a
month before the President's decision, referring to the
pending Justice Department inquiry. But, Lee added, ``that is
impracticable.''
A senior Administration official, speaking not for
attribution, said that waiting for the results of the Justice
Department investigation could delay the satellite launching
for months, if not years.
And, the official added, ``There were some imperatives to
get a timely decision because of the penalties facing the
company.''
But the company acknowledges that no such penalties have
been imposed and the launching is still scheduled for
November, as it has been for the last year.
``We believe we will not incur penalties because we can
work around the problem,'' a Loral official said late last
week.

pentagon Troubled BY LorAL's ROLE

The President did not receive a detailed assessment of the
potential damage to American security caused by Loral's help
to China in determining the cause of the 1996 launching
failure. The Pentagon was troubled by Loral's technological
assistance because the rocket science involved in putting a
satellite into orbit is similar to that needed to deliver a
nuclear warhead.
The Pentagon relying on Air Force missile and intelligence
experts, did not find grave damage but did conclude that the
United States national security had been harmed, according to
Administration officials.
A White House official said that the National Security
Council never received the Pentagon report, which was
prepared to assist the State Department. ``We did the best we
could in the memo for the President in describing what we
understood to be the allegations,'' the official said. ``We
didn't beat around the bush.''
White House aides overcame the major impediment to the
waiver--the concern of Justice Department prosecutors that it
would jeopardize any possible prosecution--by relying on the
fact that ``the Department had every opportunity to weigh in
against the waiver at the highest levels and elected not to
do so,'' as Ruff, the White House counsel, wrote on Feb. 13.
But Justice Department officials say that Ruff, in his
discussion with Robert Litt, the top aide to the Deputy
Attorney General, asked only about the impact of the waiver
on possible prosecution--not whether the department opposed
the waiver.
It is not known how the Justice Department would have
answered that question.

[[Page H4760]]

____
[From MSNBC, May 27, 1998]

Time Line of Clinton China Decisions

(By Tom Curry and Robert Windrem)

As the Clinton administration debated whether to allow U.S.
satellites to be lofted into orbit aboard Chinese missiles,
Bernard Schwartz, chairman of Loral Space & Communications,
and Democratic fund-raiser Johnny Chung, allegedly using
money from the Chinese army, gave more than $500,000 in soft
money, ostensibly used for ``party-building efforts,'' to the
Democrats.
The Justice Department and Congress are investigating how a
technical report on the explosion of a Chinese missile in
1996--a report that could help China assess the reliability
of its missile arsenal--found its way into the hands of the
Chinese.
That report was prepared by employees of Loral, Hughes
Electronics and other firms.
In a statement issued May 18, Loral said that ``Bernard
Schwartz, chairman of Loral Space & Communications Ltd. . . .
was not personally involved in any aspect of this matter. No
political favors or benefits of any kind were requested or
extended, directly or indirectly, by any means whatever.''
The firm also declared that: ``Allegations of a connection
between the launch failure and a subsequent presidential
authorization for use of Chinese launch services for another
[Loral] satellite to China are without foundation.''
Nonetheless, Justice Department and congressional
investigators are sure to scrutinize the chronology of gifts
and decisions.
The time line does not prove any cause-and-effect
relationship between donations and decisions. It does give
investigators a basis for their criminal inquiry.
April 24, 1995: Loral chairman Schwartz gives $25,000 to
the Democratic National Committee.
June 30, 1995: Schwartz gives $20,000 to Democratic
Senatorial Campaign Committee, which provide support for
Democratic Senate candidates.
Aug. 30, 1995: Schwartz gives $75,000 to DNC.
Sept. 30, 1995: Schwartz gives $20,500 to DSCC.
Oct. 9, 1995: Secretary of State Warren Christopher decides
satellites should remain a military munitions item.
Nov. 29, 1995: Schwartz gives $100,000 to DNC.
Nov. 29, 1995: A Chinese government agency writes Loral,
asking for help in getting an upgrade for its dual-use
imaging technology, exports of which are prohibited under
U.S. sanctions.
Jan. 26, 1996: Loral is sold to Lockheed for $9 billion.

clinton approves launch

Feb. 6, 1996: Clinton approves the launch of four
communications satellites on Chinese rockets.
Feb. 6, 1996: Wang Jun of CITIC, owners of percentages in
Chinese satellite companies, visits the White House for
coffee and dines with Commerce Secretary Ron Brown.
Feb. 8, 1996: The White House and Commerce Department begin
to talk about the satellite export issue again.
Feb. 14, 1996: A Chinese rocket carrying Loral Intelsat
satellite explodes, destroying a Chinese village.
Feb. 15, 1996: Schwartz gives $15,000 to DSCC.
Feb. 15, 1996: The State Department gets an urgent request
from the White House to speed up the process of switching the
satellite licensing to the Commerce Department.
Feb. 29, 1996: Schwartz gives $50,000 to Democratic
Congressional Campaign Committee, which bankrolls Democratic
House candidates.
March 8, 1996: China launches missiles.
March 14, 1996: Clinton decides to move the satellite
licensing function to the Commerce Department.
March 15, 1996: Loral President J.A. Lindfelt writes
Commerce to say the export of a dual-use technology, known as
synthetic aperture radar, is being held up by the Defense,
State and Commerce departments.
April 1996: Schwartz announces the formation of Loral Space
and Communications.
April 24, 1996: Schwartz gives $50,000 to DSCC.
June 10, 1996: Schwartz gives $100,000 to DNC.
July 22, 1996: Liu Chao-Ying of China Aerospace meets
Clinton with Johnny Chung.
July 31, 1996: Schwartz gives $5,000 to DSCC.

influx of chinese money

August 1996: Chung accounts show an influx of $300,000 from
Liu Chao-Ying.
Aug. 18, 1996: Chung gives $20,000 to DNC to attend
Clinton's birthday party.
Aug. 28, 1996: Chung gives $15,000 to DNC at Democratic
National Convention in Chicago.
Sept. 16, 1996: Schwartz gives $30,000 to DSCC.
Sept. 20, 1996: Schwartz gives $20,000 to DSCC.
Oct. 16, 1996: Schwartz gives $10,000 to DSCC.
Oct. 18, 1996: Schwartz gives $70,000 to DNC.
Oct. 24, 1996: Schwartz gives $5,000 to DSCC.
Nov. 5, 1996: New guidelines on Commerce licensing of
satellites are published.
Nov. 5, 1996: Clinton is elected to his second term as
president.
Oct., 1997: A federal investigation of Loral begins.
Feb. 12, 1998: As Clinton ponders whether to sign another
waiver allowing launch of a Loral satellite aboard a Chinese
missile, National Security Adviser Sandy Berger sends him a
memo saying the Justice Department ``has cautioned that a
national interest waiver in this case could have a
significant adverse impact on any prosecution [of Loral] that
might take place based on a pending investigation of export
violation.''
But Berger adds that ``the advantages of this project
outweigh the risk,'' and ``it is inappropriate to penalize
[Loral] before they have even been charged with any crime.''
Feb. 18, 1998: Clinton signs a waiver allowing Loral
satellite to be lifted into orbit by the Chinese.
____

[From MSNBC]

The Man Behind the China Trouble

(By Robert Windrem)

For a working class, Depression-era kid from Brooklyn,
N.Y., Bernard ``Bernie'' Schwartz has done quite well for
himself.
As CEO of Loral Space and Satellites, the 71-year-old
Schwartz is a leader in the world of satellite
communications, with significant holdings in satellite
manufacturing (Loral), broadcasting (Britain's Skynet and
Mexico's Satmex), Internet linkage (Orion Network Systems)
and global personal communications (Globalstar). His personal
wealth is measured in the hundreds of millions of dollars,
much of it coming from his sale in April 1996 of Loral's
defense business.
As important, Schwartz is a friend of the president. In
December 1996 alone, he celebrated his birthday with an
intimate dinner with President Bill Clinton and Hillary
Rodham Clinton at the White House, was their guest at the
Kennedy Center honors and shared a podium with Clinton at the
Democratic Leadership Conference, the spawning ground for the
Clinton revolution.
In March 1996, according to White House records, he got a
perk that few others have recieved--dinner and a movie in the
White House theater, along with a cast of celebrities to
share popcorn: singer Billy Joel, baseball great Hank Aaron,
actress Jennifer Jason Leigh, directors Ethan and Joel Coen,
comedian Al Franken and political strategist Dick Morris.
All together, Schwartz was invited to 21 White House events
during Clinton's first term.
And why not? Bernie Schwartz is the single biggest
contributor to the Democratic Party in the Clinton era. A
review of campaign finance databases by NBC News and the
Center for Responsive Politics shows that between 1992 and
1998. Schwartz gave the Democratic Party $1,131,500 while he,
his family, his companies, their political action committees
and executives gave another $881,565 to Democratic
candidates. Schwartz gave another $217,000 to the Democratic
Leadership Conference. Schwartz and Loral gave $367,000 to
the Republicans during that same period.
The man Mother Jones magazine called the orbiter of power,
Schwartz has increased his contributions to the Democrats
year by year. In the 1991-'92 campaign cycle, he gave
$12,500; in 1993-'94, $112,000; in 1995-'96, $586,000, and in
1997-'98, $421,000. Schwartz was the single biggest donor in
the 1996 and 1998 campaigns.
Schwartz has been dependent on a number of government
programs and regulatory processes, including the export of
communications satellites. In letters to the late Commerce
Secretary Ron Brown in March and May of 1993, Schwartz laid
out some of those businesses.
``Loral Corp. is the provider of [weather] satellites for
the Department of Commerce's GOES program, ``Schwartz wrote,
in seeking a meeting with Brown, ``In addition, there are
other matters that would be of interest to Commerce in which
Loral has a significant position, including the auction of
radio frequencies and the exporting of highly advanced
technical equipment, e.g., satellites and military hardware.
Further, Loral is the principle [sic] supplier of satellites
for Intelsat.''
When the two men's schedules didn't mesh in March or April,
Schwartz wrote Brown again, noting, ``We are affect [sic] by
a number of general areas overseen by the Commerce
Department. The Department's guidance in these areas will be
meaningful.'' Included in the list was Commerce's role in
communications-satellite licensing.
Brown ultimately took Schwartz with him to China on a trade
mission in August and September 1994. Schwartz was invited
one month after he gave his first big contribution, $100,000,
to the Democratic National Committee.
On that trip, Schwartz asked the Department to help set him
up with officials of the Chinese military and space
organizations.
A Loral spokesman initially said that Schwartz had never
``talked business'' with administration officials. But when
confronted with the letters and other indications of meetings
between Schwartz and Brown, the spokesman said any meetings
were ``routine and proper'' and that Schwartz had always
acted ``scrupulously.''
To the question of whether the contributions were meant to
help Loral with the various issues before the government,
including satellite launches in China, the spokesman
dismissed the idea as ``ridiculous'' and said there was
``never'' a time when Schwartz discussed any of this with the
president.
``Bernie Schwartz is a Roosevelt Democrat who believes that
Roosevelt saved his family,'' the spokesman added, noting
that he has been a longtime supporter of Clinton.

[[Page H4761]]

____
[From the Weekly Standard, June 1, 1998]

Selling China the Rope . . .

(By Henry Sokolski)

Presidential spokesman Mike McCurry last week justified the
Clinton administration policy that allowed the transfer of
satellite technology to the Chinese military with the hoary
``they started it'' defense. ``This administration,'' said
McCurry, ``has pursued the exact same policy pursued by the
Bush administration.''
This is not really a defense of the policy, of course, but
is it true? Republican officials, as we shall see, were not
without sin. But you might say that they worried enough to go
to confession: They tried to control against the leaking of
sensitive technology in their dealings with China by at least
monitoring and limiting the transactions. Not so the Clinton
administration, which from 1993 on not only showed contempt
for enforcing existing satellite controls but loosened them
so as to make it all but impossible to know whether they were
being violated. You might say they not only skipped
confession, but burned the church down.
Today's controversy surrounds what the Chinese have managed
to learn through launching satellites made by two American
companies, Loral Space and Communications and Hughes
Electronics. Details of a federal grand-jury investigation
have been leaked to New York Times reporter Jeff Gerth and
others that make this much clearer. In February 1996 a
Chinese Long March rocket carrying a Loral-made satellite
blew up shortly after liftoff. In an effort to clarify to
insurers who was to blame for this accident, analysis done by
Loral and Hughes was presented to the Chinese, which the U.S.
Defense Department later determined could help China perfect
more reliable, accurate, long range ballistic missiles.
(According to a CIA report leaked this spring, 13 Long March
missiles with nuclear warheads are aimed at American cities.)
The federal grand jury is now trying to determine what, if
any, U.S. export-control laws may have been broken.
This story has exploded because of the tandem revelations
that the Chinese military may have made illegal campaign
donations to aid Clinton's reelection and that Loral's CEO is
a top donor to the Democratic party. Despite Justice
Department warnings that he might undermine the grand-jury
investigation of Loral, the president went ahead earlier this
year and allowed the company to transfer and additional
satellite to China. Eager to connect the dots of the scandal,
the House last week voted 364 to 54 to suspend all transfer
of U.S. satellites to China.
Focusing on the money is exciting, but probably misses the
point when it comes to assessing the potential damage done to
national security. In fact, not just Loral and Hughes, but
Lockheed Martin, Motorola, and Martin Marietta have all
worked closely with the Chinese launch industry--work which
began not in 1996, but nearly a decade ago in 1989. And all
of this history (not just the 1996 Loral-Hughes case) bears
investigating. There is no way to judge the administration's
performance in the Loral-Hughes matter without knowing what
was attempted by prior administrations.
It was Ronald Reagan, after all, who first allowed the
launch of U.S.-made satellites on Chinese rockets, after the
Challenger space shuttle crash in 1986 deprived the satellite
industry of launch alternatives. And it was George Bush who
waived Tiananmen Square sanctions to allow the Chinese launch
of up to five U.S.-made satellites, three of which--all made
by Hughes--were launched before he left office.
If this larger record is examined, three points emerge.
First, all of our satellite transfers have helped China
perfect its military rocketry. China's launching of U.S.-made
satellites--worth up to a half-billion dollars in revenue to
date--has helped finance China's own missile-modernization
efforts and missile exports to nations like Pakistan and
Iran. It also has given the Chinese access to U.S. rocket
know-how. U.S. contractors have a natural inclination to
tutor the Chinese on what they should do to make their crude
rockets precise and reliable (they don't want to lose their
satellites, which are worth up to 10 times the value of the
launcher). Anticipating this, State and Defense officials
drew up strict rules in the late 1980s covering precisely
what information companies could share with the Chinese.
These rules required monitoring of all contractor-Chinese
exchanges (including discussions) by a U.S. government
rocket-engineer enforcement agent.
Did this prevent militarily useful information from being
conveyed to the Chinese? No. But because all exchanges were
monitored, there was a clear record of what was conveyed and
a concerted effort to keep such transfers to a minimum. Were
there infractions? Yes, but when they were reported, senior
officials in the Defense and State departments reprimanded
the contractors and got them to stop. Yet despite these
enforcement measures, a number of key technologies were
transferred before 1993. Clean-rooms were constructed in
China to assure Hughes' sensitive communications satellites
wouldn't be ruined by dust, humidity, or major temperature
changes before they were launched. And clean-room technology,
as it happens, is also crucial in preparing any advanced
system for launch, including reconnaissance satellites and
complex warhead packages.
In an attempt to clear up liability for two launch failures
in 1992, U.S. contractors also discussed how to improve
Chinese payload farings (the nose cone at the rocket's top
that shields the satellite) and attitude and engine controls,
which fire the rocket's stages and keep them and the payload
(either military or civilian) at the precise angles required
for proper functioning. Finally, each launch of a Chinese
Long March vehicle helped improve the reliability of
China's intercontinental ballistic missile fleet, since
the rockets are the same.
Republican officials, then, had a spotty record, with the
advantage that they worried about it and tried to enforce the
law. By the end of the Bush administration, proposals were
made to loosen controls over satellite transfers. Whether
they would have succeeded no one can know, because the 1992
elections intervened.
The industry, however, correctly sensed that with Clinton's
election the time for pushing for decontrol was ripe. Their
first step came in late 1993 when they asked the Commerce
Department to persuade the White House to drop government
monitoring of contractors' discussions with the Chinese. They
wanted to share, unimpeded by monitors, a key technology
known as ``coupling load analysis.'' The crude Chinese
rockets were originally designed to be so rigid that
vibration from the rocket's separating stages and engines
risked shattering delicate satellites of the sort the U.S.
companies would want to launch (and the Chinese would want to
develop later on their own). Using coupling load analysis,
the Chinese would ``soften'' their launchers, allowing them
to carry more sensitive payloads--be it satellites or the
latest in highly accurate, multiple-warhead systems.
The space industry was so eager to share this technology,
it lobbied Congress and the executive branch throughout 1993
to be given a free hand to do so. Meanwhile, government
monitors continued to file compliance reports on a host of
issues. Now, however, their concerns were handled
differently: Where before senior State and Defense officials
took action, now little or nothing happened. Word got out:
Increasingly, industry officials disobeyed government
guidance, shared their know-how with the Chinese, and
discovered that contempt for the law paid off.
By 1995, the satellites being launched by the Chinese were
more sophisticated. One of these, AsiaSat 2, a communications
satellite made by Martin Marietta, was to be placed in its
orbit with a Chinese solid-rocket kick motor--a final rocket
stage strapped to the satellite itself. This kick motor's
propellant had to be configured with extreme precision to
ensure that it would propel the satellite to an exact point
in space and no further and that it would do so without
shattering the satellite though vibration or jolts of
acceleration.
Martin Marietta and its Hong Kong customers were concerned
that the Chinese kick motor might not be capable of such
precision. They asked State if they could witness a Chinese
test-firing of the motor. Their wish was granted. What's
unknown is what, if anything, was then said to the Chinese
engineers by the company's foreign staff, who are not bound
by U.S. restrictions. Were they briefed by the contractor?
Did they speak with the Chinese or otherwise convey U.S.
solid-rocket propulsion know-how? We don't know. Why might it
matter? Perfecting kick motors can also help in China's
development of a warhead-delivery system known among experts
as a ``post-boost vehicle''--which is designed to penetrate
missile defenses. Boosting a satellite up into a precise
position in space with a kick motor is little different from
blasting warheads off their predictable course down through
space and the atmosphere.
The good news in this case is we may have a clue whether
this technology was leaked: Industry's campaign to do away
with monitoring didn't fully bear fruit until 1996. In 1995,
U.S. law still required government monitoring agents, and
compliance reports were still being filed. This paper trail
and government monitoring work didn't grind to a halt until
1996. That's when President Clinton quietly removed virtually
all commercial satellites and related technology from State
Department munitions controls (which required official
monitors). The responsibility was transferred to the Commerce
Department, which (no surprise) trusts industry to monitor
itself.
In his defense of the Clinton policy last week, Mike
McCurry cited this transfer to Commerce as the one change
that distinguished the Clinton administration's policy from
Bush administration practices. But the transfer to Commerce
was no simple ``change.'' It was tantamount to a complete
overthrow of the old export-control regime.
It was under Commerce ``controls'' that Motorola and
Lockheed worked with the Chinese to launch a series of small
communications satellites known as Iridium. Two of these
satellites at a time were successfully launched on a Long
March rocket with a multiple-satellite dispenser of Chinese
design. A host of issues about the satellite dispenser were
somehow addressed--from proper mounting and release of the
satellites to coupling load analysis and attitude control.
And all were resolved. The result? China now has mastered
a technology virtually interchangeable with that of
multiple independently targetable warhead vehicles (MIRV),
a delivery system used on America's most advanced
intercontinental ballistic missiles. Indeed, the MIRV
system that our military uses today was borrowed from
dispensers that the commercial-satellite industry first
developed.

[[Page H4762]]

One could go into greater detail on the potential military
significance of our satellite transfers to China. But this
much is already abundantly clear: Our national security
demands that Congress learn all the facts. This will require
going beyond the narrow legal question of whether Loral and
Hughes broke the law in 1996. Indeed, allegations of
influence peddling by the Chinese and the contractors should
not divert attention from the crucial questions raised by a
decade of U.S. satellite commerce with China.
Among them are these: Have we already given the Chinese
everything of value (in which case, continued satellite
commerce could hardly do much harm)? Or is there more that
they need or want that we should control and protect? What,
if anything, should be done to improve enforcement of
controls and assure effective executive-branch backing?
Finally, is the spread of missile technology so tied up in
the transfer of satellites that we delude ourselves in trying
to control their transfer? Would it make more sense to accept
this connection and expand such trade, or in the case of
China, cut it off entirely?
To get it these questions, Congress will have to hold its
own hearings--but it will need the time and depth and
expertise that can only come with the creation of an
independent commission. The commission and Congress,
moreover, are unlikely to get anywhere if U.S. contractors
are unwilling to speak freely. Only they know what has
actually been transferred to the Chinese since 1996. To
encourage them to be forthcoming, Congress and the executive
branch should grant contractors immunity from prosecution.
Meantime, a moratorium should be placed on further transfers
of satellites to China until the commission and Congress get
the answers they need. This will hurt industry only to the
extent that it drags its heels in providing information about
past transfers.
Certainly, given the seriousness of these matters, it would
be shortsighted of Congress to focus exclusively on the
political and legal issues surrounding the 1996 Loral case.
There is, after all, a broader set of concerns at stake. The
president is duty bound to provide for the common defense.
Not until we know the truth about the U.S. role in China's
missile program can we know whether the Clinton
administration has met this most basic obligation.
____

[From the Weekly Standard, June 1, 1998]

Clinton's China Commerce

(By Matthew Rees)

The Clinton administration made a fateful decision in 1996
to put the Commerce Department in charge of overseeing
exports of American satellite technology. Under fire now for
transferring this weighty responsibility from the more
security-conscious State Department, the administration
insists the decision had nothing to do with campaign
contributions from eager exporters. Instead, say the
president's spokesmen, the transfer was just the outcome of a
``bureaucratic squabble.''
Whatever role donations may be played in strengthening
Commerce's hand, allowing that department to license
militarily sensitive goods for export was not garden-variety
Washington turf battle. It was the equivalent of
decontrolling such exports entirely. The current
congressional investigations of technology transfers to the
Chinese military would not be taking place if, over the past
five years, the administration had not given Commerce
unprecedented power to promote American technology sales
abroad, with dangerously little attention paid to how these
exports can contribute to nuclear proliferation, threaten the
supremacy of the U.S. military, and undermine America's
national security.
The decontrolling mentality of the Commerce Department is
exemplified by William Reinsch, who heads the department's
Bureau of Export Administration. This is where American
companies go if they want to sell sensitive products, like
supercomputers in foreign countries. The bureau's role is
both to stop exports that might compromise national security
and to help guarantee that the sensitive products it does
approve for sale abroad don't end up in the hands of
untrustworthy governments.
But Reinsch has effectively made the bureau a servant of
Commerce's central mission: unbridled export promotion. His
motto is ``Yesterday's adversaries are today's customers.''
This mentality has led Commerce to minimize the danger of
sharing sensitive technology with countries like China. The
Pentagon concluded last year that ``United States national
security has been harmed'' by the assistance American
aerospace companies have provided to China. Nonetheless,
Reinsch was apoplectic when the House overwhelmingly voted on
May 20 to block further exports of U.S. satellites to China:
``We're talking about the potential loss of major
contracts,'' he whined to the Wall Street Journal. ``It could
really complicate people's lives.''
The controversy over the transfer of technology to China is
but one outgrowth of Commerce's policy of giving American
high-technology companies unprecedented freedom to sell their
products in foreign markets. Another startling illustration
of the fervor with which Commerce promotes the sale of even
the most sensitive exports came early in 1996. According to
Gary Milhollin, of the Washington-based Wisconsin Project on
Nuclear Arms Control, that's when U.S. government nuclear
experts asked Commerce to provide American computer companies
with a list of nuclear laboratories in Russia and China. The
goal was to prevent the companies from selling their high-
performance supercomputers to these laboratories, which the
companies might not otherwise know to be in the nuclear
business. But Commerce officials refused to provide such a
list, claiming U.S. policy prevented them from sharing such
information.
While Commerce aggressively pushed exports in the Reagan
and Bush administrations, it had not yet triumphed over its
bureaucratic rivals elsewhere in the executive branch, who
acted as a brake on Commerce's salesmanship. The Defense
Department, notably, would frequently challenge export
licenses that posed a potential threat to America's strategic
position. But a further sign of Commerce's ascendancy in the
Clinton administration is that the Pentagon, too, has become
an enthusiastic partner in promoting the sale of American
goods in overseas markets. (Reinsch said in an interview last
November that relations between Commerce and the Pentagon are
``the best they've been in 20 years.'') This is not just a
matter of politically savvy defense officials' knowing which
way the wind is blowing. An array of these officials
appointed to senior positions by the president--William
Perry, Ashton Carter, Mitch Wallerstein, Ken Flamm, to cite a
few--had made names for themselves as longtime supporters of
easing export controls.
A key official is Peter Leitner, a 12-year veteran of the
Pentagon office that oversees export controls. He notes that
the Defense Department now instructs its employees to side
with Commerce in interagency debates over export controls. In
congressional testimony last year, Leitner observed that
``this bizarre role change finds the State Department at
times in the farcical position of being the lone agency
making the national security case and opposing liberalization
positions from DoD.''
Despite their generally pro-export posture, State and
Defense still had reservations about transferring
responsibility for licensing the export of satellite
technology to Commerce. And their reservations were
justified: For items under State's jurisdiction, the decision
to grant an export license is supposed to be based only on
national security. Moreover, Congress must be notified 30
days in advance of an export. By contrast, Commerce is
mandated to weigh commercial and economic interests, and it
is not required to notify Congress of its decisions. With
communications satellites costing upwards of $100 million,
it's easy to see how commerical concerns would tip the scales
away from export controls.
When Clinton announced the transfer of licensing
responsibility on March 14, 1996. Commerce officals--who had
lobbied hard to be given licensing repsonsibility--were
thrilled. The New York Times reported that an e-mail was
circulated at Commerce announcing ``good news'' but warning
recipients not to publicize the decision in a way that would
``draw attention'' to it. Clinton officials did their best to
bury the news by not publishing the new rules in the Federal
Register until Election Day 1996. The strategy worked: One of
the most important national-security decisions made in
Clinton's first term received scant attention during his
reelection campaign from Congress and the press.
Satellites weren't the only technology transferred from
State to Commerce two years ago. Clinton also took something
known as ``hot section'' technology of the State Department's
munitions list and empowered Commerce to license such
exports. Hot-section technology boosts the performance and
durability of fighter jets. Steve Bryen, who oversaw export
controls in the Reagan administration, says this technology
is so sensitive that in previous administrations it wasn't
even shared with allies like the French and the Germans.
During the internal debate over transferring hot-section
jurisdiction from State to Commerce, some Clinton
administration officials raised questions about whether
America's national security would be compromised and whether
it might reduce the combat advantage of U.S. aircraft. But
Commerce officials argued it would be impossible for the
technology to be used by foreign manufacturers in such a way
that U.S. military power could ever be equaled or surpassed.
To the amazement of many Pentagon officials, this argument
prevailed and responsibility for licensing exports of the
technology was handed from State to Commerce.
Commerce officials have gone to extraordinary lengths to
circumvent even the most modest restraints placed on them.
Last year, Congress approval a measure requiring American
computer companies exporting to countries believed to pose a
proliferation risk (that is, Russia and China) to give the
executive branch 10 days' notice to determine whether a
proposed supercomputer export requires an individual license.
The measures also requires that, once supercomputers have
been licensed and shipped to countries of proliferation
concern, U.S. government officials must check whether the
buyers are using the computers as proposed.
Yet Commerce has made a ``deliberate effort to circumvent''
the post-shipment verifications, according to Milhollin.
Indeed, under Commerce's interpretation, in order for the
government to block an export, only the most senior cabinet
officials--undersecretaries or higher are permitted to
intervene. This prompted David Tarbell, who

[[Page H4763]]

heads the Pentagon agency that monitors export controls, to
warn in an internal memo that the National Security Council
and Commerce were using the undersecretary requirement to
``ensure that no (or very few) objections would ever be
received.'' Tarbell's complaint is echoed by three Senate
Democrats, and 10 Republicans, who have sent the president a
letter asking for the law to be enforced.
There was a very precise reason Congress required the
regulations: It has become disturbingly clear that Commerce
had little clue about the ultimate destination of an
extremely sensitive product--supercomputers. Silicon
Graphics, for example, has acknowledged having sold four
supercomputers to one of Russia's premier nuclear-weapons
design laboratories, Chelyabinsk-70, and claimed it made the
sale only because company officials didn't know the
laboratory was involved in nuclear production.
Even more troubling was Reinsch's announcement last June
that 47 supercomputers had been sold to China. Technical
experts say these computers provide unprecedented
technological capabilities to Beijing are likely to become a
key element in China's nuclear program. But when Reinshc was
asked about this at a congressional hearing last November, he
said there was no evidence any of the computers was being
used for nuclear purposes. When pressed by Rep. Duncan Hunter
on whether Commerce even knew where the computers were
located, Reinsch bobbed and weaved until finally giving an
answer that summed up the bankruptcy of the Clinton
administration's export policy: ``With respect to some of
them, yes. With respect to all of them, not yet.''
There's a simple reason Reinsch couldn't be more
definitive: China won't allow American officials to conduct
post-shipment verifications, designed to guarantee that
materials exported from the United States are being used as
promised. Thus Reinsch acknowledged last December--six months
after learning about the 47 supercomputers sold to China--
that ``no formal post-shipment verifications have yet been
requested.'' And now that another six months have passed,
there's no evidence Commerce knows anything more about where
the supercomputers are or how they're being used.
So what has the Clinton administration learned about the
pitfalls of a permissive export-control policy? Apparently
nothing. Consider this: The Defense Technology Security
Administration--the agency charged with overseeing export
controls for the Pentagon--is scheduled to be abolished this
fall. Its successor agency will be moved within Defense to an
acquisitions department that has traditionally been hostile
to export controls. Even more ominous is a recent Defense
News report that the Commerce Department is pushing to grant
an export license for the sale of a high-temperature furnace,
manufactured by a New Jersey-based company called Consarc, to
a Chinese government agency. This sale--already approved in
an interagency process--is all the more remarkable because
the furnace will bolster Beijing's ability to produce nuclear
warheads.
There's an interesting story behind the furnace. Consarc
was all set to ship it to Iraq in 1990, one month before the
invasion of Kuwait. The sale was blocked at the last minute
by senior officials at the Pentagon and the National Security
Council. Had it gone through, there's little doubt Saddam
would have used it to bolster his arsenal. Clinton
administration officials should have learned something from
this. Short of a missile attack, what will wake them up?
____

[From the New York Times, June 18, 1998]

U.S. Rethinking a Satellite Deal Over Links to Chinese Military

(By Jeff Gerth)

Washington, June 17.--Faced with growing criticism of its
satellite exports to China, the Clinton Administration is
rethinking whether to allow one of the biggest sales to date,
a $650 million deal President Clinton quietly approved two
years ago.
Government officials said the Pentagon and State Department
were raising new questions about whether a Chinese-controlled
company with close ties to China's military should be allowed
to buy the satellites, which contain some of the United
States' most sophisticated communications equipment.
The satellites are the cornerstone of a commercial mobile
phone network planned for China and 21 other Asian nations.
American officials said their design included a powerful
antenna that could eavesdrop on mobile phone calls in China
or other countries in the region. It could also be used by
the Chinese military to transmit messages through hand-held
phones to remote parts of China.
Antennas of these dimensions are a mainstay of the United
States' and Russia's eavesdropping satellites and have not
previously been exported to China, though a sale to the
United Arab Emirates is pending. They also can be used to
extend the range of mobile phones.
Mr. Clinton leaves next week for China, and the
Administration had hoped to use the trip to showcase a
variety of business deals and agreements, including
cooperation on civilian satellite and rocket projects.
Meanwhile, the House continued investigating the export of
space technology today.
Administration officials said concerns about the pending
satellite sale had been deepened by American intelligence
reports about Shen Rongjun, the Chinese Army general who
oversees his country's military satellite programs. The
reports quote the general as saying he planned to emphasize
the role of satellites in gathering information.
In an unusual arrangement, Hughes Space and Communications
hired General Shen's son, a dual citizen of Canada and China,
to work on the project as a manager. The company said it was
aware of his familial ties; it is not clear whether the
Clinton Administration knew.
Father and son were both directly involved in the project,
and American officials said the intelligence reports said the
general was pressing his son to move it forward.
The New York Times reported last week that the Chinese
military was sending many of its coded messages through
American-made commercial satellites sold to Asian companies.
China's military satellite network collapsed in 1996, when
its first satellites wore out and the replacements failed to
work as planned.
President Clinton approved the Hughes project on June 23,
1996, after advisers assured him the communications satellite
technology was readily available from European suppliers and
would not contribute to Chinese military capabilities.
China already has a burgeoning cellular telephone system,
which relies on ground-based transmitters. There are
almost 1.5 million cellular phones in Beijing and
Shanghai, but the system is less developed in the
country's more remote areas, industry officials say.
Donald O'Neal, a spokesman for Hughes, said the satellites
were ``inherently dual use,'' meaning that they have both
civilian and military potential. ``The satellite is not
designed for military application,'' Mr. O'Neal said. ``But I
don't know how you can prevent it.''
The Federal Government could still stop the deal. Mr.
O'Neal said Hughes, which is part of Hughes Electronics, a
subsidiary of the General Motors Corporation, was waiting for
the Commerce Department to review its application to sell the
satellite to the Asian consortium, A.P.M.T. or Asia-Pacific
Mobile Telecommunications.
Liu Tsun Kie, a spokesman for the consortium, said in a
telephone interview from Singapore that the satellite network
would be marketed to civilians by regional telecommunications
operators. It would be up to Chinese Government regulators,
Mr. Liu said, to decide if China's military could use the
satellites.
Mr. Liu predicted that the Clinton Administration would
eventually approve the deal. ``In view of the improving Sino-
American relationship, as well as the close rapport
established between the U.S. satellite industry and major
industry leaders in China and the Asia Pacific,'' he said,
``we are confident that A.P.M.T. will obtain all the
necessary approval and export license to insure no delay in
satellite launch.''
Mr. Liu said the project would attract more than 200,000
mobile phone customers in China within its first two years.

the two crucial steps in a satellite sale

Making a satellite sale to China involves two crucial steps
that occur simultaneously. Aerospace manufacturers must
persuade the President to sign a waiver of the sanctions
imposed on Beijing after the Tiananmen Square killings in
1989. Each project requires a separate waiver.
At the same time, companies apply to Federal Government
agencies for permission to export specific technologies used
in the satellites. Satellite exports to the Chinese military
are banned, but sales to Chinese companies are generally
allowed, unless they would advance military development in
areas like intelligence gathering and nuclear weapons.
Mr. Clinton granted the waiver for the Hughes project two
years ago and the company obtained the necessary export
licenses. Since then, however, Hughes has changed the design
to enhance the satellite's capabilities, requiring it to
return to the Government for a new license.
That decision is now before a Government Department and
including officials from the Pentagon, State Department, the
Arms Control and Disarmament Agency and the Department of
Energy. Each department casts a single vote, with the
decision made by majority rule. A dissenting agency can
appeal to the President, but that has never happened.
A Commerce Department spokesman declined to discuss the
case, saying it involved confidential business information.
Privately, Commerce Department officials are arguing that
the deal should go forward because the design approved in
1996 is substantially the same as the current configuration,
Administration and Congressional officials said.
But some Pentagon and State Department officials believe
the license should face more scrutiny in light of the new
information about General Shen and the capabilities of the
satellite. Administration officials also said that the
increased scrutiny by Congress of the Chinese military and
American satellites has prompted officials to pay closer
attention to exports to China.
Several Congressional committees are investigating whether
the policies on technology exports hurt the national
security.

technical questions determine fate of deal

The issue turns on highly technical questions. An
Administration official who disagrees with the Commerce
Department's

[[Page H4764]]

analysis said the Hughes design is substantially different
from what was approved two years ago.
``The antenna sent up the flags,'' the official said. ``It
is more powerful than what we have licensed before.''
The antenna allows the satellite to receive incoming
signals. But a sophisticated antenna, like the one currently
under review, can become a listening device that is very
effective against ground-based interception efforts,
Government reports show.
Before 1996, the Pentagon could easily have stopped the
license, because satellites were treated as military items
and subject to State Department authority. That year
President Clinton shifted jurisdiction to the Commerce
Department, easing the controls and lessening the
influence of the Pentagon, a senior Government auditor
told Congress earlier this month.
A.P.M.T. was organized in the early 1990's. Most of its
stock was held by five Chinese state-owned entities: China
Satellite Launch and Tracking Control, a unit of Costind, and
scientific and research arm of the Chinese military, the
China Aerospace Corporation, part of the defense-industrial
complex, China Resource Holdings, a trading company that owns
a bank in Hong Kong with the Riady family of Indonesia, and
subsidiaries of Chinese electronics and telecommunications
ministries. A small stake was held by a Singapore company.
In February 1996, the consortium authorized Hughes to
proceed with the design and construction of a sweeping mobile
satellite telecommunications network that would span 22
countries in Asia and the Pacific, from Pakistan to
Indonesia.
China's own space program--both rockets and satellites--was
then under severe strain.
A Chinese rocket exploded shortly after liftoff in
February. Two months later, engineers from Hughes and Loral
Space Communications were brought in by insurers and China
Aerospace to help figure out what went wrong.
The conversations that ensured between the companies and
Chinese technicians are now the subject of a criminal
investigation, which is seeking to determine whether American
export laws were violated. Both companies deny wrongdoing.
While China is trying to repair its rocket program, its
satellites began to fail. The first domestically produced
satellites, launched by the Chinese military in the early
1990's were wearing out, and the first replacement, built in
cooperation with the German company Daimler-Benz, had failed
to achieve proper orbit after its 1994 launch.
In early 1996, all this led China's most senior military
official, Gen Liu Huaqing, to discuss his concern with
General Shen, who until a recent reorganization was a senior
Costind official and oversees China's satellite and rocket
launching programs, American officials said.
General Shen and General Liu have publicly promoted
satellite technology as crucial to the future development of
China's military capabilities. General Shen has privately
assured his colleagues about his ability to fix China's
satellite problems and improve the military's surveillance
and intelligence-gathering capabilities, American officials
said.
At about the same time, there were concerns within Hughes
and A.P.M.T. over how long it was taking President Clinton to
make a decision about the deal, Mr. O'Neal and American
officials said.
Commercial satellite exports to China have been banned
since the killings in Tiananmen Square in 1989, but the
President can waive the prohibition, which Presidents George
Bush and Clinton have done 20 times.

`expedited handling' of waiver was sought

Hughes officials wanted ``an expedited handling'' of the
waiver in order to meet a contractual deadline, Mr. O'Neal
said. And recently released White House documents show that
the company hoped to have the President sign off on the deal
before Hughes' chairman left China on June 19, 1996.
The staff memorandum that the President relied on to
approve the deal made no mention of the Loral-Hughes help for
China's rocket program. Three weeks before the memorandum to
the President, the State Department had alleged, in a letter
to Hughes, that there had been a violation of the arms export
control law during the rocket accident review.
The President granted the waiver on June 23.
Soon after the Presidential action, Hughes received a
license to export a satellite. Later that summer, Hughes
applied for another export license that would allow Shen Jun,
the son of General Shen, to work on projects subject to
United States export controls, including the A.P.M.T.
project, Mr. O'Neal said.
``We applied for and received an export license that
allowed him to participate as a translator in the A.P.M.T.
preliminary design review,'' Mr. O'Neal said.
Mr. Shen was hired in 1994 by Hughes for his computer
expertise, though the company was also aware of his family
ties before he joined the company, Mr. O'Neal said.
General Shan has been involved in the A.P.M.T. project as
the overseer of the Chinese launch and tracking company and
his son has given Hughes marketing advice about China and
technical advice about mobile telephone networks, Mr. Liu and
a Hughes executive said.
Mr. O'Neal said he had no comment on the Shen family
discussions because ``anything he said to his dad is
personal.''
Despite all the flurry of activity in mid-1996 between
Hughes and A.P.M.T., the deal bogged down amid internal
squabbles. But by this year the pace had picked up again and
last month the consortium reorganized itself and signed
another deal with Hughes for an upgraded satellite.
The new satellite will have greater power to transmit and
receive signals. Its payload includes a large scale antenna
reflector and a digital on board processor, Mr. Liu and Mr.
O'Neal said.
The antenna and processor enabled the consortium's network
to pinpoint low-power hand-held phones and simultaneously
handle 16,000 phone conversations. Mr. Liu said that the
regional affiliates ``will be able to intercept calls if
required by local authorities'' but the consortium will not
be able to intercept.
As a result of the recent reorganization, the consortium is
now two thirds owned by its Chinese affiliates China
A.P.M.T., said Mr. Liu, the consortium's deputy president.
China A.P.M.T., in turn, is owned by the same five Chinese
entities, including the Costind unit, and it will be the
local A.P.M.T. franchise in China.
The president of A.P.M.T. and China A.P.M.T. is Li Baoming
and A.P.M.T.'s chief engineer is Feng Ruming. Mr. Liu said
both men have senior posts with the China Satellite Launch
and Tracking Control Corporation, the unit of Costind
overseer by General Shen. American intelligence reports say
Mr. Feng and Mr. Li are top military officers, according to
Administration officials.
Mr. O'Neal said that Hughes was ``not aware'' of A.P.M.T.'s
military ties and while ``there could be'' some, it was up to
the Federal Government to vet those connections. That is
precisely what is now happening.
Mr. Speaker, the House should heed the advice of former CIA Director
Jim Woolsey who testified before the Committee on Rules that, quote,
this is what he said, ``I can think of no subject that more closely
would require a careful and thorough investigation by a select
committee of Congress, and I could think of few that would even be in
the same league.'' That is what the former CIA director said, that was
appointed by President Clinton.
Mr. Speaker, I would urge all Members to support the creation of the
Select Committee so that Americans can have some answers to the
questions about the formulation of United States security policy with
regard to Communist China.
Mr. Speaker, I yield such time as he may consume to the gentleman
from Florida (Mr. Goss).
(Mr. GOSS asked and was given permission to revise and extend his
remarks.)
Mr. GOSS. Mr. Speaker, I rise in support of this resolution, which, I
am pleased to say is the result of much hard work and bipartisan
cooperation on the part of the leadership, the Rules Committee, and the
prospective chairman and ranking member of the proposed select
committee. I am very proud of the manner in which this process has been
handled, and I think this resolution is a credit to all involved and to
the entire House.
To the minority members of our Rules Committee, who raised in their
views accompanying our report repeated concerns about the manner in
which this inquiry will be handled, I point to the remarks of both the
chairman-designate, Mr. Cox, and the ranking member-designate, Mr.
Dicks, before our Rules Committee panel. They are developing a strong
bipartisan working relationship and came to the Rules Committee
together in full agreement about the particulars of this resolution.
They both spoke of commitment to running a professional, serious and
collegial inquiry.
Mr. Speaker, it's fair to say that we all would prefer not to be here
today creating a select committee to review U.S. national security and
military/commercial concerns with the People's Republic of China. We
would certainly all prefer that we did not have before us very serious
allegations of illegal foreign influence in our Democratic process,
troubling concerns about the transfer of highly sensitive military
information and technology to the Chinese, and the very real potential
that palpable damage has been done to our national security.

But the fact is that we have been presented with serious and credible
allegations on these points--and the American people want us to get to
the bottom of what happened, how it happened, and what the impact has
been for the security of our citizens and our interests.
We have an obligation to accomplish this goal in a thorough and
timely manner, and I am convinced that the only good way to do that is
to establish this select committee.
Members know I do not take this step lightly. As chairman of the
House Intelligence Committee, I am aware of the jurisdictional
authorities relevant to this subject, not just in my own committee, but
in as many as 7 other House committees. I know that many of these
permanent committees of the House have, in fact, been pursuing pieces
of this investigation up to this point.

[[Page H4765]]

But the fact remains that we need to move on this and start getting
some answers to these serious questions now. For that we need to have a
relatively small, singly focused panel with the enhanced investigatory
authorities provided by this resolution. The resolution provides
mechanisms to ensure that the Select Committee has the clout to get its
work done and has proper channels through which to have maximum
cooperation with, and assistance from, the existing House committees.

It certainly makes sense to me that on matters of such grave
importance as the national security and the sanctity of our domestic
political system, we should all pull together in a bipartisan way to
shed light on the truth and, if necessary, consider means to ensure
that proper protections and safeguards do exist in our policies on
technology transfers and controls over sensitive information with
respect to foreign nations.
I agree with former Director of Central Intelligence James Woolsey
who said in testimony at the Rules Committee this week that he can
think of no subject that more clearly would require careful and
thorough investigation by a select committee of the Congress.
Finally, Mr. Speaker, let me say that I very much hope the
administration will make good on its pledge to cooperate fully with
this important inquiry. And by cooperate I mean not just talking about
being helpful, but about actually providing all relevant material to
the inquiry, helping the select committee gain access to the
individuals it needs to interview, and offering a full and complete
accounting of its relevant policies.
I would hope that we do not see more of the practice we've become
used to with this administration of attempting to change the subject,
throw up roadblocks and shoot the messenger when serious questions are
raised about its policies and decisionmaking. The American people
expect and deserve better than that from this administration.
Mr. SOLOMON. Mr. Speaker, I reserve the balance of my time.
Mr. FROST. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, the gentleman from New York (Mr. Solomon) and I had a
discussion about an hour ago on the rule, and at that time I urged the
gentleman to not engage in a public hanging before the facts are in.
And I would repeat that at this point.
Mr. Speaker, it is a foregone conclusion that the House will vote
today to create a new Select Committee to investigate the allegations
that a U.S. company transferred sensitive technology to the People's
Republic of China that could endanger national security and that
campaign contributions played a role in obtaining the licenses
necessary for U.S. companies to launch their satellites on Chinese
missiles. I support the creation of the Select Committee. But I do so
with some reservations.
Mr. Speaker, my reservations are shared by my Democratic colleagues
on the Committee on Rules which has original jurisdiction to create
this Select Committee. In our committee report minority views, we have
laid out our concerns about the structure of the Select Committee and
the decision-making process that is provided for by the enabling
resolution.
We are heartened that the designated ranking minority member, the
gentleman from Washington (Mr. Dicks) feels that he has reached an
understanding with the designated chairman of the Select Committee on
several matters that are vitally important to assuring that the Select
Committee's work product is viewed as fair and that the rights of the
minority have not been ignored.
However, Mr. Speaker, there are matters which I do feel compelled to
bring to the attention of the House. The Committee on Rules majority
states at the outset that they have used the Iran-Contra Select
Committee as a model for this Select Committee. While this model
bestows extraordinary powers on the chairman, Iran-Contra also stands
as a model of bipartisan cooperation and the joint leadership of that
committee acted jointly on all matters of procedural concern.
The Democratic members of the Committee on Rules hope that the model
of bipartisanship on the Iran-Contra Select Committee holds true on
this Select Committee.
Our fears of abuse, while tempered by the reputation for fairness of
the designated chairman of the Select Committee, are based on the
experience of the past year and a half. Granting unilateral powers to
the chairman of such a serious investigation gives us serious concern,
and we hope, for the sake of the integrity of this body and for the
finding of truth in this matter, that the assurances that we have been
given that the rights of the minority will be protected in this
investigative process and that the minority will be consulted on all
important matters coming before the Select Committee.
This happened during Iran-Contra, and if that Select Committee is to
serve as a model for this one, we hope that the same level of
bipartisan cooperation would exist over the course of this
investigation.
Mr. Speaker, we are concerned about the unilateral subpoena power,
unilateral deposition power, as well as the ability of the Select
Committee to gain access to 10 years' worth of tax returns of
individuals and entities under investigation by the Select Committee.
We are concerned about how this information will be handled, and under
what circumstances it will be released to the public.
These are all legitimate concerns, but we remain hopeful that the
participants in this investigation will realize that if it is tainted
by accusations of partisan high-handedness, that any findings and
recommendations that may be made will be tainted as well.
Finally, Mr. Speaker, my Committee on Rules Democratic colleagues and
I are particularly concerned about the breadth and scope of this
investigation. This resolution rightfully empowers the Select Committee
with the authority to make a full and complete inquiry into not just
technology transfers which may have contributed to the enhancement of
the offensive capabilities of the People's Republic of China and its
effect on the national security concerns of the United States, but
other issues relating to export policies and the influence of campaign
contributions. These are legitimate areas of investigation, but I am
concerned that the authorities granted in this resolution are so broad
that the Select Committee could go on working well into the future.
In addition, Mr. Speaker, I would like to point out that the
designated ranking member of the Select Committee, the gentleman from
Washington (Mr. Dicks), has asked that the many other investigations
now ongoing suspend their investigations of those matters under the
jurisdiction of the Select Committee while it is in operation.
This is necessary, Mr. Speaker, to ensure that the Select Committee
can get its work done and not find the need to go on ad infinitum, and
I hope the other committees of the House will cooperate in this matter.
We need to find out what has happened and the Select Committee needs to
go on about its business and report back to the House as soon as
possible.
Mr. Speaker, I support the creation of the Select Committee, but I do
so with an important caveat: If this investigation wanders from the
focus of determining the answers to the questions at hand and if some
of my colleagues insist upon demagoguing this issue, they risk damaging
not only the legitimacy of any of the findings of the committee, they
risk damaging the integrity of this institution. I urge the Select
Committee to ensure that its investigation is fair and thorough.
Mr. SOLOMON. Mr. Speaker, will the gentleman yield?
Mr. FROST. I yield to the gentleman from New York.
Mr. SOLOMON. Mr. Speaker, I would point out to the gentleman, because
I know the gentleman from California (Mr. Condit) brought this up,
worrying that this might go into another Congress and may run up costs
of up to $5 million, I would just point out that the language speaks
specifically for this Congress and this Congress only. It would take a
further action by this body. So I wanted to call that to the attention
of the gentleman.
Mr. FROST. Mr. Speaker, reclaiming my time, I appreciate the comments
of the gentleman. There is an underlying question here which may well
drive this investigation into the next Congress, which of course would
have to be authorized by the next Congress. The underlying issue is the
concern that the gentleman from New York (Mr. Solomon), who is the
chairman of the Committee on Rules, has raised for many years about
whether we ought to be doing any of this.
Of course, the gentleman who is the chairman of the committee has
objected to and opposed the transfer of

[[Page H4766]]

technology which began during Republican administrations. And my
concern is that if this committee goes to the fundamental issue of
whether we ought to be doing business with China, that is a bottomless
pit and that is a matter that could go on for a very long time.
There are legitimate differences within the Republican Party on this
issue, as there are legitimate differences within the Democratic Party
on this issue. So there is the potential for this investigation, even
though it must be renewed at the beginning of the next Congress, to go
on for a very long time if we go into the underlying foreign policy
question of whether we ought to be doing any business with China.
Mr. SOLOMON. Mr. Speaker, if the gentleman would continue to yield, I
think it might help to clarify. The gentleman is absolutely right. He
and I were around during the Iran-Contra debate and I have here the
final report of the Iran-Contra Committee. The last paragraph says,
``The President cooperated,'' and this is talking about President
Reagan, ``cooperated with the investigation. He did not assert
executive privilege. He instructed all relevant agencies to produce
their documents and witnesses, and he made extracts available.''
Mr. Speaker, I wanted to point out if we do get full bipartisan
cooperation, I do not expect this to go any further because of the
narrow scope.
Mr. FROST. Mr. Speaker, reclaiming my time, while the scope of the
matter under discussion today is fairly narrow, the resolution itself
is very broad. It is possible that this resolution could be used in a
future Congress as a means for examining the entire foreign policy of
the United States as it relates to China, regardless of whether there
was any wrongdoing found by this investigation.
I only raise that cautionary flag, as I did in the Committee on
Rules, because that is really a legitimate matter to be determined by
our foreign policy committees of this Congress, perhaps even by our
Select Committee on Intelligence, perhaps by our Committee on National
Security, but not necessarily by this Select Committee. Because the
gentleman and previous Republican Presidents have a philosophical
difference on this issue, and I would hope this Select Committee does
not go to that philosophical difference of whether we ought to be
engaging China, but simply limits itself to the matters at hand which
raise the question of whether there was improper conduct in terms of
the implementation of that policy.
Mr. Speaker, I reserve the balance of my time.
Mr. SOLOMON. Mr. Speaker, I yield 2 minutes to the gentlewoman from
New Jersey (Mrs. Roukema), an outstanding veteran Member of this
Congress from Ridgewood, New Jersey.
Mrs. ROUKEMA. Mr. Speaker, I do appreciate the gentleman from New
York (Mr. Solomon) yielding me this time at this point in this debate.
Mr. Speaker, I rise in strong support of this proposal. It is
essential and timely. There is a compelling need for this committee.
New evidence has come to light that against the recommendations of the
Defense Department and the State Department, how conditions were waived
and national security considerations were waived, and Loral Space and
Communications transferred sensitive satellite and missile technology
to China.
Mr. Speaker, I must also say that the technology, as we now know,
allowed the Chinese to greatly improve their ballistic missile and
guidance capability. We have recently learned about proliferation of
nuclear weapons in India and Pakistan. That may or may not have any
relationship. But in any case, the timeliness has been proven and these
are important national security issues at hand.
But I must say we must put politics aside. As the gentleman from
Florida (Mr. Goss) said during the earlier debate, this is not about
fault-finding. I would therefore call upon all of us, Republicans,
Democrats, to put politics aside and proceed with a strong interest and
fairness to find the truth in this matter. The national security
ramifications of this investigation are too important to become mired
in politics.
Then I must feel compelled to say that I am so pleased that we have
as chairman the gentleman from California (Mr. Cox). We all have utmost
faith in the gentleman's ability to lead this investigation. He has the
experience, he has the knowledge, and above all, he has the trust,
based on that experience, of all of his colleagues because he is known
as the essence of honesty, fairness and tact.
In conclusion, I want to be very clear. This is not about a real
estate deal. We must, we must approve this and get on with the business
of the security interests of our country.
Mr. Speaker I rise in strong support of H. Res. 463--Establishing a
Select Committee to Investigate Concerns with the Peoples Republic of
China. This is essential and timely.
The Investigation. This could become one of the important
Congressional investigations to date. This Committee will focus on the
real National Security concerns that have been surfaced, hence its
title. The Members of the Select Committee will have experience and
knowledge of defense, national security, and intelligence issues.
There is Compelling Need for the Committee. New evidence has come to
light that against the recommendations of the Departments of Defense,
State, and Justice, in February 1998, President Clinton waived national
security considerations and allowed Loral Space and Communications to
transfer sensitive satellite and missile technology to China.
This technology allowed the Chinese to greatly improve their
ballistic missile and guidance capability. The consequences of this
transaction poses the greatest nuclear threat to the United States
since the end of the Cold War.
We have seen in the last few months, the proliferation of nuclear
weapons to India and Pakistan. With the Chinese perfecting their
weapons systems, the world is becoming a much more dangerous place.
This investigation will not only help us get the facts but it will help
inform us on these important national security issues.
We Must Put Politics Aside. Our colleague Representative Goss stated:
This is not about fault finding. These allegations have serious
national security implications and should be investigated in a serious,
bi-partisan manner.
I call on all Republicans and Democrats to put politics aside and
proceed with a strong interest in integrity to find the truth in this
matter. The National Security ramifications of this investigation is
too important to become mired in politics.
I call on the President to act in good faith with the investigation
and to release all documents relating to the case.
Congressman Cox. My good friend from California, Congressman
Christopher Cox will be in charge of this investigation. I have the
utmost faith and confidence in Congressman Cox.
He has the Experience: He was senior counsel on the Iran-Contra
Investigation and an accomplished attorney.
He has the Knowledge: Congressman Cox is a recognized expert on
foreign affairs and the intelligence community.
He has the Trust: Throughout his career in Congress, Mr. Cox has
commanded respect from all of his colleagues for his honesty, fairness,
and tact.
He will lead this investigation fairly and with a firm hand. He will
not allow this very important matter to dissolve into ``political
theater.'' I strongly urge my colleagues on both sides of the aisle to
work closely with Congressman Cox to find the truth.
In conclusion, let me be very clear. This is not a real estate deal
or a sex scandal and this is not about partisan politics. These charges
go to the heart of our national security and potentially threaten every
American. This Congress must rise to the challenge. A serious,
professional and comprehensive investigation must be conducted to
assure our national defense, and control over the laws of our land. I
urge all Members to support this Resolution.
Mr. FROST. Mr. Speaker, I yield 3 minutes to the gentleman from
California (Mr. Fazio).
Mr. FAZIO of California. Mr. Speaker, I have enjoyed listening to the
debate thus far where we have been asked on the one hand to put
politics aside, and on the other hand we have heard the alarm sounded
about all these terrible transgressions that have occurred supposedly
in China. Prejudging the case as we create the jury system seems to be
in vogue these days.
But Mr. Speaker, I support this resolution for a couple of reasons.
One, I do not want to miss the opportunity to congratulate the
Republicans on finally investigating something in the proper manner.
We have had 50 separate investigations in this Congress, 38 of them
continuing. Not one of them has been brought to the floor in this
manner so that all the Members could hear the

[[Page H4767]]

evidence and decide whether they want to spend the public's money to
conduct them. The rest of them are funded by the slush fund, we used to
call it the Speaker's slush fund until we got a new Speaker. But it is
really operated out of the Committee on House Oversight with a partisan
majority and no input from the minority. They make the decisions as to
whether or not we are going to pursue an investigation.

{time} 1415

So I support this one because it is done at least intentionally in
the right manner. I support the gentleman from California (Mr. Cox) and
the gentleman from Washington (Mr. Dicks). I think they are honorable
people.
I have confidence that, even though this may be somewhat too broad in
its basic premise that the two of them working together as they have
thus far will make sure that it does not go too far, does not really go
from what I think is the consensus need we have in this institution to
look at our policies in regard to technology transfer and exports to
China.
There has been a lot of Clinton bashing, and I think unfortunately
so. There has been a certain amount of unwarranted China bashing, the
purple rhetoric I guess is expected in a campaign year.
But what is most important here is that we review American policy,
policy that began with President Reagan, was implemented by President
Bush, and this President. The same debates that we have had on export
administration acts, on the armed services authorizations is occurring
on this issue.
Those kinds of debates that we have had frequently on this floor the
20 years that the gentleman from Texas (Mr. Frost) and the gentleman
from New York (Mr. Solomon) and I have served in this institution are
the very subject that ought to be looked at by this Select Committee.
There is no question that we do have some policies that may need to
be changed, but the implication that somehow we have acted here because
of campaign funds flowing in one direction or another is I think a
little bit hard to take from a Congress that refuses to even consider
whether or not we are going to do away with soft money or reform the
campaign finance system that we all, like it or not, have to live with.
I think this committee has been given the power to really move toward
a solution to all the rhetorical debate that we have heard, some of
which may really warrant policy changes.
I hope this committee's leadership will be given the membership that
will focus on the details and on the issues that really need to be
addressed and not the politics of election 1998. With that caveat, I
support this effort and wish them well.
Mr. FROST. Mr. Speaker, I yield 7 minutes to the gentleman from
Washington (Mr. Dicks).
(Mr. DICKS asked and was given permission to revise and extend his
remarks.)
Mr. DICKS. Mr. Speaker, for several months, no less than seven
committees of the House of Representatives have been investigating
issues relating to the transfer of technology between the United States
and the People's Republic of China.
The resolution now before us would vest primary responsibility for
the conduct of these inquiries in a select committee. Given the complex
and contentious nature of these matters, many of which involve highly
classified information, consolidating the current investigations in one
committee with the authority to consider matters which cross
jurisdictional lines is, in my judgment, appropriate.
The technology transfer matter raises important questions of national
security. The House deserves to have these questions addressed in a
manner which is thorough and which focuses on substance rather than
seeking to maneuver for partisan advantage.
Based on my discussions as the perspective ranking Democrat over the
past week with the gentleman from California (Mr. Cox), prospective
chairman of the Select Committee, I believe we share a commitment to
make sure that the investigation is conducted, and the Select Committee
operates, in a manner which brings credit to the House.
I want to commend the gentleman from California (Mr. Cox) for his
willingness to consider my views on ways in which the rights of the
minority to participate in the work of the Select Committee can be
better ensured. We have begun to forge the kind of working relationship
which will increase the likelihood that H. Res. 463, the rules which
the Select Committee will adopt, and the understandings which the two
of us have reached and will reach are implemented fairly.
The Select Committee would have a limited amount of time to review
some complex and potentially contentious issues. At this point, I
believe the inquiry needs to examine the following matters:
First, the Select Committee must review the policy devised under
President Reagan and continued in the Bush and Clinton administrations
to permit U.S.-owned satellites to be launched on foreign rockets,
particularly those of the People's Republic of China. Is this a sound
policy which appropriately balances potential economic, technological,
and national security risks and benefit for the United States?
In this context, we need to examine changes in that policy and its
implementation over the past decade. We must also look at the proposed
sale of satellites containing sophisticated communications equipment to
the People's Republic of China.
The second matter arises from the failed launch of a satellite
undertaken pursuant to that policy and concerns whether, in assisting
the People's Republic of China in determining the causes of that
failure, information harmful to the national security of the United
States was transferred to the Chinese by representatives of U.S.
companies.
I would note that any information transferred which might have had
negative national security implications was apparently done without the
approval or knowledge of Executive Branch officials.
Was there an enhancement of the reliability of the ballistic missiles
of the People's Liberation Army as a result of these transfers; and if
so, how did that happen? This is an area in which we must proceed
carefully, because legal proceedings are under way, but I believe the
American people deserve as clear a determination as possible on the
national security implications of these transfers.
The fact that the Department of Defense and the Central Intelligence
Agency apparently reached different conclusions on this question
underscores the difficulty of the Select Committee's task.
Finally, the Select Committee must examine whether money flowed into
the political process in the United States from either domestic or
foreign sources in an effort to influence Federal decisions on
technology transfers. Were any decisions made to benefit a company,
whether it be Loral or any other firm, because of campaign
contributions? In this matter, as well, pending legal proceedings may
affect our work.
As I noted, the Select Committee would have a relatively short life,
and there is much to do. If it is the will of the House that a Select
Committee be formed to conduct this inquiry, I would hope that the
permanent committees which have had aspects of these matters under
investigation will follow precedent and defer to the new committee.
It will not assist the Select Committee, nor will it justify the
considerable amount of taxpayer funds to be authorized for this effort
if it is to be but one of many investigations of these matters
involving the same documents and the same witnesses. I hope the Select
Committee can get the cooperation of the House in this area and in all
others which may affect its ability to do its job.
Mr. Speaker, I urge the adoption of this resolution.
Mr. Speaker, I would like to enter into a colloquy with the
distinguished chairman designee of the committee.
To the gentleman from California (Mr. Cox), in the discussion of
section 7, ``Procedures for Handling Information,'' the Committee on
Rules' report on H. Res. 463 makes clear that classified information
may be disclosed publicly only pursuant to a vote of the Select
Committee. Section 7, however, discusses the making public of any
information in the Select Committee's

[[Page H4768]]

possession, not only classified information.
Is it the gentleman's interpretation of section 7 that the Select
Committee will vote to disclose publicly any information whether the
information is classified or unclassified?
Mr. COX of California. Mr. Speaker, will the gentleman yield?
Mr. DICKS. I yield to the gentleman from California.
Mr. COX of California. Mr. Speaker, I thank the gentleman for
yielding to me. That interpretation is the correct interpretation. As
the gentleman knows, that section of this resolution, section 7, is
taken essentially verbatim from the rules of the House concerning the
procedures for the Permanent Select Committee on Intelligence of which
the gentleman is the ranking member. Our procedure on the Select
Committee will be the same as it is on the Permanent Select Committee
on Intelligence.
Mr. DICKS. I thank the gentleman from California (Mr. Cox) for that
answer. In its discussion of section 10 of H. Res. 463, ``Tax
Returns,'' the report of the Committee on Rules notes the committee's
intention that the authority granted by section 10 extends to the
Select Committee ``acting collegially.''
Is it the gentleman's interpretation of sections 10 and 4 of the
resolution that the act of ``naming'' an individual or entity under
section 10 for purpose of inspecting and receiving tax information
about that individual or entity shall be done pursuant to a vote of the
committee?
Mr. COX of California. Mr. Speaker, will the gentleman yield to me?
Mr. DICKS. I yield to the gentleman from California.
Mr. COX of California. Mr. Speaker, that is, again, the correct
interpretation. As the gentleman and I have discussed privately, this
is a very important power that the Select Committee will possess. It
should be used sparingly, not only after a vote, but after consultation
and I would hope deliberation not only of the chairman and ranking
member but all of our members.
Mr. DICKS. Mr. Speaker, I would also say, as the prospective ranking
Democrat on this select committee if the House approves this
resolution, we will be very careful and judicious about the use of this
authority.
Mr. SOLOMON. Mr. Speaker, I yield 2 minutes to the gentleman from
Colorado Springs, Colorado (Mr. Hefley), one of the most knowledgeable
Members of this House on national security and the chairman of the
Subcommittee on Military Installations and Facilities.
Mr. HEFLEY. Mr. Speaker, I rise in strong support of this resolution.
As a member of the Committee on National Security, I believe it is
imperative that we form this investigative committee. We need to find
out whether or not America's national security has been or is being
harmed by current policies which govern the transfer of dual-use
missile and satellite technology to China.
Presently, the Committee on National Security and the Committee on
International Relations are holding a joint hearing on this very
subject. One thing we are consistently being told by the Clinton
administration officials is that the current policies are no different
than the policies under President Reagan and President Bush. Mr.
Speaker, that is simply not true.
Under Presidents Reagan and Bush, all military sensitive technology
was licensed by the State Department. This licensing authority was
further backed up by the veto power granted to the Department of
Defense if they felt our national security could be compromised by a
particular transfer.
Under President Clinton, the licensing authority has been taken away
from the State Department and given to the Department of Commerce. The
Commerce Department's goal is to promote business, not to protect
national security. Additionally, the veto power of the Department of
Defense has been removed. Clearly, economic and commercial benefits
have become the most important factor in this administration's
licensing determinations.
But all of that aside, that is not why I support this resolution.
This committee is not to serve as a political witch-hunt, but instead a
bipartisan investigation into whether or not we should be more worried
about our national security today than we were yesterday.
We are dealing with the only Communist country in the world with
nuclear capability. I urge the support of all Members on this
resolution, because we are talking about the safety of our Nation. We
are talking about the safety of our families.
The SPEAKER pro tempore (Mr. Foley). The gentleman from Texas (Mr.
Frost) has 11 minutes remaining. The gentleman from New York (Mr.
Solomon) has 17 minutes remaining.
Mr. FROST. Mr. Speaker, I yield 3 minutes to the gentleman from Texas
(Mr. Edwards).
Mr. EDWARDS. Mr. Speaker, four years ago now, Speaker Newt Gingrich
said this as quoted in the Washington Post, ``Clinton Democrats should
be portrayed as, quote, the enemy of normal Americans.'' He then goes
on to say, ``Republicans will use the subpoena power to investigate the
administration.''
Some 4 years later, 50 investigations later in this House, some $17
million later of taxpayers' money, recently in the Congressional
Quarterly, a senior Republican leadership aide was quoted as saying
this, ``It has been very expensive, and it has not amounted to much.''
In light of the use of taxpayer dollars and duplicative and, in many
cases, dead-end investigations, my original intent would be not to
support with taxpayers' money one more investigation. But I think,
because of the quality of the leadership of this committee and because
of the importance of this issue, many of us, if not all of us, in this
House want to support this resolution.
But I must express one reservation. I would imagine what an appeals
court would say in reviewing a previous judge's decision in a case if,
in the first statement in that court, the judge stood up and said in
reference to the defendant in the case, talked about his sordid
history, sordid history. Those were the words used in the very first
statement by the gentleman from New York, the chairman of the Committee
on Rules, in opening up what I thought was intended to be an
investigation to get the facts first and then make the judgment what
those facts can be concluded to say.

{time} 1430

I would hope that perhaps I misunderstood, and I would be very happy
to yield time to the distinguished chairman of the committee. I hope
perhaps I misunderstood the context of his statement.
Mr. SOLOMON. Mr. Speaker, will the gentleman yield?
Mr. EDWARDS. I yield to the gentleman from New York.
Mr. SOLOMON. Since 1988, under Presidents Reagan, Bush and Clinton, I
have opposed this policy. So there is no politics involved.
Mr. EDWARDS. So, to clarify for the record, the reference to ``sordid
history'' refers to multiple administrations' policy in regard to
technology transfer to China, and those remarks were not focused on
this administration's particular actions that we are supposed to be
reviewing in this matter?
I think this is an important point. If the first statement on the
floor of this House is to say we are now going to review the sordid
history of the person we are supposed to be investigating before we
draw a conclusion, then a reasonable person in or out of this House
must conclude that perhaps this will be somewhat like the Burton
investigation, where the chairman of the committee was quoted as saying
he wants to ``get'' the President before he has even concluded the
investigation.
Again, I would hope to work with the distinguished chairman and
others in reviewing all of the facts, listening to the committee before
we determine whether this administration has been part of a sordid
history or not. And, again, perhaps the chairman could better put in
context the meaning of those words. I think that would be helpful to
get this investigation started on a bipartisan, objective basis.
Mr. SOLOMON. Mr. Speaker, I yield myself 30 seconds to say to the
gentleman, I do not know of any previous administrations where there
were sordid facts, as far as companies like Loral that were involved.
This is what we were referring to, that we want to get to the bottom of
it; which has nothing to do with administration politics.

[[Page H4769]]

Mr. Speaker, I yield 2 minutes to the gentleman from Dallas, Texas
(Mr. Sam Johnson), a very distinguished Member and former prisoner of
war for 7 long years, and a great American.
(Mr. SAM JOHNSON of Texas asked and was given permission to revise
and extend his remarks.)
Mr. SAM JOHNSON of Texas. Mr. Speaker, according to this
administration, the President's trip to China next week marks a new
high in U.S.-China relations. I am not sure that is true. The national
security of this Nation is at serious risk today due to actions taken
by this President and his administration regarding missile technology
transfers. It is not a reason for celebration. It is not a high point.
The transfer of U.S. missile technology to China, with the direct
approval of the Clinton administration, raises some rather significant
questions:
One, why the authority over the waiver program was shifted from State
to Commerce; two, why an American company was granted a second launch
waiver when it was already being investigated by the Justice
Department; three, why the Clinton administration tried to shield China
from sanctions; and finally, what military benefit did China gain as a
result of that technology transfer?
Mr. Speaker, today we have the opportunity to set up a committee that
will search for the honest answers, and I think the honest answers are
going to be forthcoming. We have a minority leader and our own majority
chairman that are going to get the answers, for our national security
is not a partisan issue.
I urge my colleagues to demand the truth and support this resolution
today.
Mr. FROST. Mr. Speaker, I yield 1 minute to the gentleman from Texas
(Mr. Edwards).
Mr. EDWARDS. Mr. Speaker, following up with my exchange with the
chairman of the Committee on Rules, it seems to me that one of the
serious subjects of discussion and review of facts for this committee
is, what was the role of the Loral Corporation in this process.
The chairman of the Committee on Rules, on the floor of the House in
response to my question, referred to Loral's sordid history and its
involvement in this process. Once again, I would point out that for a
judge, or one of the judges, in this basically being a court case or
investigation, to say in the very first remarks that there has been a
sordid history of involvement by one of the groups being reviewed by
this investigation seems to me to be drawing conclusions before we get
the facts. It seems to me to sound more like the Burton committee,
which had a chairman that wanted to draw the conclusions before he even
had the hearing.
So, in the midst of this discussion, my intent is not to question the
motives of the chairman of the Committee on Rules; my intent is to try
to start out this process on a bipartisan, objective, fair basis. And I
hope the distinguished gentleman would make clear what he means by
referring to the ``sordid history'' of Loral or any others in this
case.
Mr. SOLOMON. Mr. Speaker, I yield myself such time as I may consume
to quote from my opening statement. It says, ``Beginning in April of
this year, the New York Times has focused on `the somewhat sordid
history,' '' repeating exactly what they say. The gentleman should read
the newspapers.
Mr. Speaker, I yield 1 minute to the gentleman from Ohio (Mr.
Traficant), a very admired Member of the other side of the body, and I
wish I had more time to yield to him.
Mr. FROST. Mr. Speaker, I yield 1 minute. The gentleman from Ohio
(Mr. Traficant).
The SPEAKER pro tempore (Mr. Foley). The gentleman from Ohio (Mr.
Traficant) is recognized for 2 minutes.
Mr. TRAFICANT. Mr. Speaker, I thought I would just rise to tell it
exactly like it is.
Last week North Korea threatened Uncle Sam. I want to quote what
North Korea said. They said they will not only continue to build
ballistic missiles, but they will sell ballistic missiles to the
enemies of Uncle Sam or to whomever they choose. And if Uncle Sam does
not like it, they can compensate us for it. They can compensate us;
that is unbelievable.
Intelligence sources said North Korea is taking this bold stand
because they see the way China and Communists are being treated around
the globe, and that there is a weakening of resolve in Washington.
Now, there is nobody that opposed Reagan's economic policies more
than I, maybe right or wrong. But one thing about Ronald Reagan, North
Korea would have never made that threat to Ronald Reagan. Never. And
Ronald Reagan was firm in his resolve about Communists. But if
Communist China can get $50-plus billion a year in trade surpluses, get
free missile technology, have access to the Lincoln bedroom, why cannot
all the other Communists do it? In fact, why cannot communism make a
comeback, colleagues?
It is time to question the White House. We have put China on the back
page because of Monica. Let me tell my colleagues, the time now is to
look at China. What did they do, and did they attempt to influence our
national security? I do not think President Clinton sold our country
out, but I believe they have been damn casual with China and with
Communists.
And I would just like to say that we have had brave military that
gave their lives fighting in foreign wars to defeat communism and to
secure America. And I will be damned if I am going to be a part of any
situation that is going to weaken or threaten our national security
because of some political partisanship here. We should investigate and
find the truth, and let the chips fall where they may. Because I will
tell my colleagues what, it sounds awfully stinky to me.
Mr. FROST. Mr. Speaker, I would ask about the remaining time.
The SPEAKER pro tempore. The gentleman from Texas (Mr. Frost) has 6
minutes remaining, and the gentleman from New York (Mr. Solomon) has
13\1/2\ minutes remaining.
Mr. SOLOMON. Mr. Speaker, I yield 2 minutes to the gentlewoman from
Jacksonville, Florida (Mrs. Tillie Fowler), a member of the Committee
on National Security, who is so very knowledgeable about this issue.
Mrs. FOWLER. Mr. Speaker, I rise in strong support of this
resolution. As a member of the House Committee on National Security, I
cannot overstate the significance of the mission we are undertaking
with the creation of this Select Committee.
More than 1 year ago, the gentleman from Illinois (Mr. Henry Hyde)
and I wrote to the Attorney General, asking her to investigate the
loosening of export controls on a host of sensitive dual-use equipment
and technology.
We asked the Attorney General to investigate the questionable
decision to allow McDonnell Douglas to sell sophisticated machine tools
to the PRC. Just last week ``60 Minutes'' reported that those machines
have ended up in a Chinese Silkworm missile plant.
The Loral incident is what has brought us to this point today, and
for good reason. According to press reports, the Defense Technology
Security Administration concluded that, ``United States national
security has been harmed.'' And an April 9th, 1996, Air Force
Intelligence report reached a similar conclusion.
Clearly, the questionable actions of both Loral and the
administration have serious implications for our national security. But
so do the questions surrounding transfers of sophisticated machine
tools, supercomputers, hot section technology and telecommunications
technology.
The Select Committee we are creating today faces a daunting but
critical task. In a nutshell, it must answer the question: Did the
United States provide technology to China that will benefit its
military? And, if so, why did this administration allow it to happen?
I urge my colleagues to vote ``yes'' on the resolution so that the
American people can find out the answers to these questions.
Mr. Speaker, the letter to the Attorney General referred to earlier
is provided for the Record as follows:
May 22, 1997.
Hon. Janet Reno,
U.S. Department of Justice,
Washington, DC.
Dear General Reno: We are writing to request that the
Justice Department's investigation of alleged illegal foreign
campaign contributions to the Clinton campaign and the
Democratic National Committee include an investigation of the
possible link between

[[Page H4770]]

contributions from various Asian donors and the Clinton
Administration's loosening of export controls on sensitive
dual-use equipment and technology, which has specifically
benefited the military and intelligence services of the
People's Republic of China (PRC).
The PRC makes no secret of the fact that it is attempting
to acquire a diverse, highly flexible, strategically
dispersed and survivable military production capability, with
force projection a key goal. The administration's pattern of
decontrol and failure to enforce existing law with regard to
both export procedures and punitive sanctions has
substantially benefited the military goals of the People's
Republic of China and presented serious new challenges to the
security interests of the United States.
In our minds, there are a number of cases that raise
serious questions about whether improper outside influence
was brought to bear on Administration officials--including
the President--and if that influence has resulted in
decisions and policies that have liberalized the transfer of
defense-related technologies, something which is clearly
incompatible with the interest of our nation.

Examples of Questionable Decisions

Sales of sophisticated machine tools to the PRC.--A U.S.
company, McDonnell Douglas, was allowed to ship an almost
complete intact missile and strategic bomber factory to the
PRC, despite strong opposition from specialists at the
Department of Defense and evidence that the equipment was
going to be diverted to military production facilities. Prior
to the issuance of the original export licenses, the case was
discussed with concern at the highest levels of the
government, yet it was approved in the end.
News stories and a GAO report requested by the House
National Security Committee (HNSC) all show that before the
equipment was shipped, U.S. officials were aware that the
conditions placed upon issuance of the export licenses were
unenforceable, and that the Chinese possibly intended to
divert the equipment they had purchased for civilian use to a
military production facility.
During the period immediately before the sale--and before
the export licenses had been approved--McDonnell Douglas
officials showed officials from CATIC (China National Aero-
Technology Import-Export Corporation) through the plant
during operating hours, allowing them to videotape classified
production lines in operation--a violation of current export
law, which was brought to the attention of Administration
officials and ignored.
Finally, once it was determined that the diversion had
occurred, political appointees at the Departments of Commerce
and Defense approved new licenses with different end-use
conditions and destinations rather than expressing
displeasure with the Chinese or exercising their legal
obligation to sanction the PRC.
While aspects of this case are now under review by a grand
jury in the District of Columbia, it is imperative that this
matter receive full scrutiny in the context of the Justice
Department's investigation of campaign finance improprieties.
Supercomputers.--The extraordinary loosening of controls on
militarily-sensitive supercomputers, which began in 1994, has
resulted in the sale of 46 supercomputers rated at 2,000
MTOPS and above to China in the last 15 months. According to
a former Under Secretary of Defense who testified before the
HNSC Procurement Subcommittee, these sales may have given the
PRC more supercomputing capacity than the entire Department
of Defense. Uses for supercomputers include: design and
testing of nuclear weapons; sophisticated weather
forecasting; weapons optimization studies crucial for the
efficient use of chemical and biological weapons; aerospace
design and testing; creating and breaking codes;
miniaturizing nuclear weapons, and finding objects on the
ocean floor, including submarines.
The decision to loosen U.S. controls on supercomputers was
made in spite of the opposition of a number of Defense
Department staff experts, senior military and intelligence
officials, and Members of Congress. It was justified by a
report commissioned and paid for by the Department of
Commerce using outside consultants supplied by political
appointees at the Department of Defense. The contract for the
report was awarded noncompetitively to a well-known opponent
of export controls. Viewed in the context of recent
revelations about Chinese efforts to influence the U.S.
political scene, the significant policy changes that have
been pursued in this area bring into question the
Administration's motives for decontrol.
Hot Section Technology.--The Administration's decision to
change the jurisdiction on so-called ``hot section''
technology from the Department of State, which had guarded it
jealously, to the Department of Commerce, which is in the
business of making it easier for foreign entities to purchase
U.S. products and technology also raises serious concerns.
Hot section technology allows U.S. fighter and bomber
aircraft to fly for thousands of hours longer than those
produced by less sophisticated manufacturers, providing our
military forces with significant cost and readiness
advantages over those of other nations. Again, serious
questions arise with respect to policy changes in light of
Chinese efforts to influence Administration actions.
Telecommunications.--In 1994, sophisticated
telecommunications technology was transferred to a U.S.-
Chinese joint venture called Hua Mei, in which the Chinese
partner is an entity controlled by the Chinese military. This
particular transfer included fiber optic communications
equipment which is used for high-speed, secure communications
over long distances. Also included in the package was
advanced encryption software.
Both of these transfers have obvious and significant
military applications, and, again, this transfer was
accomplished despite opposition from technical experts at the
NSA and within the Pentagon.
The administration's actions in the above-mentioned cases,
and others, have resulted in a significant increase in
indigenous Chinese military production capabilities. Given
China's willingness to sell weapons and technology to the
highest bidder--including rogue nations such as Iran, Iraq,
and Libya--these transfers could represent a profound threat
to U.S. military personnel. Moreover, the increased
capabilities that China has gained portend a regional arms
race and increase the possibility of conflict in a region ion
which the United States has major interests.
Under the circumstances, if flies in the face of common
sense for us to provide the PRC with the means to achieve
their military and strategic goals. The administration's
decision seem very suspect to us, and we strongly believe
they should be investigated.
In closing, we would note that this letter does not reflect
a change in our belief that a special counsel should be
appointed to investigate allegations of improper fund-raising
and campaign contributions, but rather an acknowledgement of
the investigation as it presently exists.
Thank you for your consideration of this request. We look
forward to your timely response.
Sincerely,
Tillie K. Fowler,
Committee on National Security.
Henry Hyde,
Chairman, Committee on the Judiciary.

Mr. FROST. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, I think it is vitally important that this matter be
approached on a bipartisan and objective basis. The two people who are
involved, the designated chair and the designated ranking minority
member, clearly are fair-minded and will proceed in a reasonable and
forthright manner. I would urge other Members on the other side of the
aisle to give the gentleman from California (Mr. Cox) and the gentleman
from Washington (Mr. Dicks) the opportunity to conduct a fair and
bipartisan examination into these vital questions.
We will support this resolution. We would urge that this
investigation be done promptly and fairly and in a bipartisan manner.
Mr. Speaker, I have concluded my remarks. I urge adoption of the
resolution.
Mr. Speaker, I yield back the balance of my time.
Mr. SOLOMON. Mr. Speaker, I yield myself such time as I may consume
to, first of all, just concur in exactly what the gentleman from Texas
has just said.
Mr. Speaker, I yield the balance of my time to the gentleman from
California (Mr. Cox) to conclude for the majority. We have heard a lot
of praise heaped on this gentleman. I only wish I had his demeanor and
his calmness in the way that he approaches measures on this floor. He
would make a great Supreme Court Justice some day, as well as a great
Congressman.
Mr. COX of California. Mr. Speaker, I certainly thank the chairman of
the Committee on Rules for those generous comments and, obviously, all
of us being in politics here know that at this point I should sit down,
because never will people say nice things like this about me again and
I am enjoying the opportunity.
But I want to begin by saying exactly the same kinds of things about
my colleagues who have brought us to this point, the threshold of
investigating in exactly the right way a very serious matter. In
particular, the ranking member on the Permanent Select Committee on
Intelligence, the gentleman from Washington (Mr. Dicks), with whom it
has been my pleasure to work for the last several days in a very
serious and urgent way; and, as well, the minority leader of the House,
who made this his priority, exactly as did the Speaker of the House.
As a consequence, I can thank the gentleman from Texas (Mr. Frost),
who has conducted the debate on the minority side today, for his
recommendation of an ``aye'' vote. And I can thank my colleagues for
what I believe is the collective and considered

[[Page H4771]]

wisdom of the House in proceeding in this way.
Much of what we will undertake, much of what we will look at in this
Select Committee will be secret information, and we will keep it to
ourselves. Much of the reason that we are here, frankly, rests upon
classified information. But the reason that we are here is also largely
a matter of public record, and so what I would like to do now is begin
with what is publicly known about why it is important for us to proceed
in this way with this Select Committee.
In 1996, the People's Republic of China's Long March rocket, carrying
a Loral satellite, exploded shortly after lift-off. It was at least the
fifth Long March rocket to fail in the last 7 years. On April 4th,
1998, the New York Times, in a story by Jeff Gerth, first reported that
a Federal grand jury was investigating whether, during the
investigation of that 1996 launch failure, Loral and Hughes provided
any information to the Chinese People's Liberation Army without the
necessary State Department approval, and whether such illegal actions
may have advanced the Chinese People's Liberation Army nuclear missile
capabilities.
According to the April 4 New York Times article, since this proposed
export could involve the transfer of the same kind of expertise that
prompted the Justice Department to investigate in the first place, some
Clinton administration officials claimed that the February waiver
undermined the investigation.

{time} 1445

The Justice Department made these very concerns known to the White
House prior to the February 1998 waiver.
On April 5, 1998, Ronald Ostrow and Jim Mann reported in the Los
Angeles Times that missile guidance technology transferred to the
People's Liberation Army may have gone beyond China's own nuclear
arsenal. They quoted a Defense Department official, who stated,
``Guidance for missiles seems to be a critical factor for Iran and
North Korea. And they are getting it from China.''
On April 13, the New York Times reported further that in May 1997,
the Pentagon issued a classified report which concluded that Loral and
Hughes provided information that ``significantly improved China's
nuclear missile capabilities.''
The New York Times reported on May 15, 1998, that a Chinese military
officer, Lieutenant Colonel Liu Chao-Ying, funneled nearly $300,000 to
Democratic fund-raiser Johnny Chung. Lieutenant Colonel Liu is an
officer of China Aerospace, a state-owned company directly involved in
China's satellite launching program. Lieutenant Colonel Liu was
previously an officer of China Great Wall Industries, the manufacturers
and sellers of M-11 missiles components to Pakistan.
On May 23, the New York Times reported that on February 18, 1998,
while the Justice Department investigation of Loral was ongoing,
President Clinton issued another waiver for Loral to export a satellite
to China.
On June 1, 1998, the New York Times reported that the State
Department also advised the White House prior to the February 1998
waiver that Loral's actions in 1996 appeared to be ``criminal'' and
``knowing'' and that U.S. law might prohibit satellite exports to the
People's Republic of China in any event due to the PRC's transfer of
missile technology to Iran.
The June 1 article also reported that the administration was aware of
the Defense Department's concerns over possibly aiding the People's
Liberation Army's nuclear missile program, citing a February 12
memorandum to the President from National Security Adviser Samuel
Berger.
Also, according to the June 1 article, and again citing internal
White House and State Department memoranda, National Security Adviser
Berger and the President were made aware of the fact that Loral stood
to lose the contract and to incur a financial penalty if the waiver
were not granted soon.
The waiver was issued shortly after the supposed deadline. The launch
project was kept on schedule for November 1998, and Loral did not incur
any penalties from the Communist Chinese Government.
The press has also reported that the CEO of Loral, Bernard Schwartz,
has become a close personal friend of the President and was the largest
single donor to the Democratic Party in 1996.
On June 10, the General Accounting Office testified before the Senate
Intelligence Committee that President Clinton's March 14, 1996,
decision to transfer ultimate control of satellite exports from the
State Department to the Commerce Department diminished the ability of
the Defense Department to block satellite exports for national security
reasons.
Until that 1996 decision by the President, the Department of Defense
was routinely deferred to by the Department of State and national
security was paramount when waivers were sought. Now, however, the
Commerce Department, whose mission it is to promote exports, is the
agency in control.
In testimony before the House Committee on National Security in
November of 1997, Commerce Department official William Reinsch
acknowledged that while some 47 supercomputers have been sold to the
People's Republic of China, the United States Government was unaware of
their whereabouts. These supercomputers may be used for, among other
purposes, simulating testing of nuclear weapons.
60 minutes, on CBS, reported on June 7, 1998, that the People's
Liberation Army illegally diverted enormous McDonnell Douglas
aeronautics machine tools, approaching the length of a football field,
for use in People's Liberation Army military aircraft production.
McDonnell Douglas is now the subject of a grand jury investigation of
the diversion.
All of these media reports give rise to a number of unanswered
questions that will be the object of the Select Committee's focus.
There is no more important question before the Select Committee than
the one with which we will begin. ``Has the reliability or accuracy of
nuclear missiles in the arsenal of the People's Liberation Army been
enhanced; and, if so, how did this happen?''
I agree with all those who have spoken that this Select Committee is
the most effective means to inquire into these matters. There are some
8 committees of the House of Representatives, with nearly 300 members,
that properly have jurisdiction over these committees. Consolidating
this investigation into a Select Committee whose members have been
chosen by the Speaker of the House and by the minority leader, who are
expert in the matter, who can consult collegially with one another, and
who can maintain discretion and confidentiality, will reflect credit
upon this House.
I urge my colleagues to support this resolution, to support the
creation of the Select Committee, and to answer this serious question
in the serious manner that it deserves.
Mr. SOLOMON. Mr. Speaker, I yield such time as he may consume to the
gentleman from New York (Mr. Gilman).
(Mr. GILMAN asked and was given permission to revise and extend his
remarks.)
Mr. GILMAN. Mr. Speaker, I thank the gentleman from New York for
yielding.
I rise in strong support of this measure to establish a Select
Committee on U.S. National Security and Military/Commercial Concerns of
the People's Republic of China. I commend the gentleman from California
(Mr. Cox) for his statement.
I want my colleagues to know, we have just concluded 2 days of
extensive hearings on this measure, which underscores the importance of
moving ahead with the Select Committee. I urge my colleagues to support
the measure.
Mr. Speaker, I want to thank the gentleman from New York, Mr.
Solomon, for allowing me the opportunity to provide my views on the
establishment of a Select Committee to examine U.S. policy regarding
the transfer of U.S. satellites to China.
I strongly support the creation of this Select Committee. The
Committee, headed by the able gentleman from California, Mr. Cox, will
be well-positioned to examine not only such issues, as whether American
satellite companies divulged militarily-sensitive technology enabling
China to improve its ballistic missiles.
The Committee will also be able to engage major policy issues,
including whether our national security has been jeopardized by this
Administration's policy of placing commercial interests above national
security interests in granting licenses and national interest waivers

[[Page H4772]]

for the export of commercial communication satellites to China.
In the 1992 Presidential campaign, Governor Clinton attacked
President Bush for ``coddling dictators'' including those who ordered
the massacre of pro-democracy demonstrators at Tiananmen Square.
Who could have imagined then that President Clinton's Administration
would face questions about compromising our national security at the
hands of those same Chinese leaders.
Yet, in May of 1997 a highly classified Pentagon report has
reportedly concluded that scientists from two leading American
satellite companies, Loral Space and Communications and Hughes
Engineering, provided expertise that significantly improved the
guidance and reliability of China's ballistic missiles.
Moreover, documents released by the White House disclose that the
Justice Department had concerns about issuing a waiver in February 1998
for the export of a Loral satellite, and the Clinton Administration
knew it. Accordingly to a memo prepared for the President by his
National Security Advisor, Justice ``has cautioned that a national
interest waiver in this case could have a significant adverse impact on
any prosecution that might take place * * *''
Despite this, the President decided to grant Loral a waiver for the
export of a satellite to China.
I am concerned that in its desire to promote the commercial interests
of key U.S. companies, the Administration may have undercut its own
efforts to limit the spread of missile technology to China, which today
is the world's leading exporter of weapons of mass destruction.
The Administration has insisted, that nothing untoward has occurred,
that no inappropriate decisions or actions have been taken that
resulted in harm to U.S. national security.
We will look to this proposed Select Committee to examine these
issues and look forward to its conclusions and recommendations.
Accordingly, I urge Members of the House to support the establishment
of this important panel.
Mr. SOLOMON. Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore (Mr. Foley). Pursuant to House Resolution
476, the previous question is ordered on the resolution, as amended.
The question is on the resolution, as amended.
The question was taken; and the Speaker pro tempore announced that
ayes appeared to have it.
Mr. SOLOMON. Mr. Speaker, I object to the vote on the ground that a
quorum is not present and make the point of order that a quorum is not
present.
The SPEAKER pro tempore. Evidently a quorum is not present.
The Sergeant at Arms will notify absent Members.
The SPEAKER (during the voting). The Chair will remind Members that
it is their responsibility to be in the Chamber when a vote is
underway.
The vote was taken by electronic device, and there were--yeas 409,
nays 10, not voting 14, as follows:

[Roll No. 245]

YEAS--409

Abercrombie
Ackerman
Aderholt
Allen
Andrews
Archer
Armey
Bachus
Baesler
Baker
Baldacci
Ballenger
Barcia
Barr
Barrett (NE)
Barrett (WI)
Bartlett
Barton
Bass
Bateman
Becerra
Bentsen
Bereuter
Berman
Berry
Bilbray
Bilirakis
Bishop
Blagojevich
Bliley
Blumenauer
Blunt
Boehlert
Boehner
Bonilla
Bonior
Bono
Borski
Boswell
Boucher
Boyd
Brady (PA)
Brady (TX)
Brown (CA)
Brown (FL)
Brown (OH)
Bryant
Bunning
Burr
Burton
Buyer
Callahan
Calvert
Camp
Campbell
Canady
Cannon
Capps
Cardin
Carson
Castle
Chabot
Chambliss
Chenoweth
Christensen
Clay
Clyburn
Coble
Coburn
Collins
Combest
Condit
Cook
Costello
Cox
Coyne
Cramer
Crane
Crapo
Cubin
Cummings
Cunningham
Danner
Davis (FL)
Davis (IL)
Davis (VA)
Deal
DeFazio
DeGette
Delahunt
DeLauro
DeLay
Deutsch
Diaz-Balart
Dickey
Dicks
Dingell
Dixon
Doggett
Dooley
Doolittle
Doyle
Dreier
Duncan
Dunn
Edwards
Ehlers
Ehrlich
Emerson
Engel
English
Ensign
Eshoo
Etheridge
Evans
Everett
Ewing
Farr
Fattah
Fawell
Fazio
Filner
Foley
Forbes
Ford
Fossella
Fowler
Fox
Frank (MA)
Franks (NJ)
Frelinghuysen
Frost
Gallegly
Ganske
Gejdenson
Gekas
Gephardt
Gibbons
Gilchrest
Gillmor
Gilman
Goode
Goodlatte
Goodling
Gordon
Goss
Graham
Granger
Greenwood
Gutierrez
Hall (OH)
Hall (TX)
Hamilton
Hansen
Harman
Hastert
Hastings (WA)
Hayworth
Hefley
Hefner
Herger
Hill
Hilleary
Hilliard
Hinchey
Hinojosa
Hobson
Hoekstra
Holden
Hooley
Horn
Hostettler
Hoyer
Hulshof
Hunter
Hutchinson
Hyde
Inglis
Istook
Jackson (IL)
Jackson-Lee (TX)
Jefferson
Jenkins
John
Johnson (CT)
Johnson (WI)
Johnson, E. B.
Johnson, Sam
Jones
Kaptur
Kasich
Kelly
Kennedy (MA)
Kennedy (RI)
Kennelly
Kildee
Kilpatrick
Kim
Kind (WI)
King (NY)
Kingston
Kleczka
Klink
Klug
Knollenberg
Kolbe
Kucinich
LaFalce
LaHood
Lampson
Lantos
Largent
Latham
LaTourette
Lazio
Leach
Lee
Levin
Lewis (CA)
Lewis (KY)
Linder
Lipinski
Livingston
LoBiondo
Lofgren
Lowey
Lucas
Luther
Maloney (CT)
Maloney (NY)
Manton
Manzullo
Markey
Mascara
Matsui
McCarthy (MO)
McCarthy (NY)
McCollum
McCrery
McDade
McGovern
McHale
McHugh
McInnis
McIntosh
McIntyre
McKeon
McKinney
Meehan
Meek (FL)
Meeks (NY)
Menendez
Metcalf
Mica
Millender-McDonald
Miller (CA)
Miller (FL)
Minge
Mink
Moran (KS)
Moran (VA)
Morella
Myrick
Neal
Nethercutt
Neumann
Ney
Northup
Norwood
Nussle
Obey
Olver
Ortiz
Owens
Oxley
Packard
Pallone
Pappas
Parker
Pascrell
Pastor
Paul
Paxon
Payne
Pease
Pelosi
Peterson (MN)
Peterson (PA)
Petri
Pickering
Pickett
Pitts
Pombo
Pomeroy
Porter
Portman
Poshard
Price (NC)
Pryce (OH)
Quinn
Radanovich
Rahall
Ramstad
Rangel
Redmond
Regula
Reyes
Riggs
Riley
Rivers
Rodriguez
Roemer
Rogan
Rogers
Rohrabacher
Ros-Lehtinen
Rothman
Roukema
Roybal-Allard
Royce
Rush
Ryun
Sabo
Salmon
Sanchez
Sanders
Sandlin
Sanford
Sawyer
Saxton
Scarborough
Schaefer, Dan
Schaffer, Bob
Schumer
Scott
Sensenbrenner
Serrano
Sessions
Shadegg
Shaw
Shays
Sherman
Shimkus
Shuster
Sisisky
Skaggs
Skeen
Skelton
Slaughter
Smith (MI)
Smith (NJ)
Smith (OR)
Smith (TX)
Smith, Adam
Smith, Linda
Snowbarger
Snyder
Solomon
Souder
Spence
Spratt
Stabenow
Stark
Stearns
Stenholm
Stokes
Strickland
Stump
Stupak
Sununu
Talent
Tanner
Tauscher
Tauzin
Taylor (MS)
Taylor (NC)
Thomas
Thompson
Thornberry
Thune
Thurman
Tiahrt
Tierney
Traficant
Turner
Upton
Velazquez
Vento
Visclosky
Walsh
Wamp
Waters
Watkins
Watt (NC)
Watts (OK)
Waxman
Weldon (PA)
Weller
Wexler
Weygand
White
Whitfield
Wicker
Wise
Wolf
Woolsey
Wynn
Young (AK)
Young (FL)

NAYS--10

Conyers
Furse
Kanjorski
Lewis (GA)
McDermott
Mollohan
Murtha
Nadler
Oberstar
Yates

NOT VOTING--14

Clayton
Clement
Cooksey
Gonzalez
Green
Gutknecht
Hastings (FL)
Houghton
Martinez
McNulty
Moakley
Torres
Towns
Weldon (FL)

{time} 1511

Mr. OBERSTAR, Mr. NADLER and Ms. FURSE changed their vote from
``yea'' to ``nay.''
Ms. CARSON changed her vote from ``nay'' to ``yea.''
So the resolution was agreed to.
The result of the vote was announced as above recorded.
A motion to reconsider was laid on the table.

____________________