Clinton Warned on China DealPETE YOST , Associated Press
May. 23, 1998 1:41 AM ET
WASHINGTON (AP) _ With a major Democratic donor's company anxiously awaiting an answer, President Clinton gave the go-ahead for a satellite deal with China, despite Justice Department fears that the move would undermine a criminal investigation, national security memos show.
Clinton approved a waiver for a Loral Space & Communications satellite in February, amidst a probe of possible illegal assistance to the Chinese in 1996 after one of their rockets carrying a Loral satellite exploded.
The Pentagon concluded in a still-classified report that sensitive missile-related technology was transferred to the Chinese after the explosion.
The Justice Department's criminal division was concerned that if any charges were brought against Loral, Clinton's waiver blessing the satellite transaction would become an issue at a trial and result in acquittal.
Clinton said his administration's decision ``was the right one,'' declaring that time would eventually bear that out.
``I can assure you it was handled in the routine course of business,'' he said, adding there was no improper transfer of advanced technology in this case.
The Justice Department and congressional committees have recently opened investigations into whether Loral chief executive Bernard Schwartz's nearly $1 million in Democratic donations since 1995 influenced approval of the waiver. Schwartz and the White House deny any such connection.
White House and State Department advisers urged Clinton in memos stamped ``secret'' to approve the waiver on grounds it was ``in the national interest,'' the memos show.
``We believe that the advantages of this project outweigh the risk, and that we can effectively rebut criticism of the waiver,'' national security adviser Sandy Berger wrote the president on Feb. 12.
``On fairness grounds, we believe it is inappropriate to penalize (Loral) before they have even been charged with any crime.''
The State Department additionally advised Clinton that the approval would not aid China's military, but would give it an incentive to abide by rules to stop the spread of missiles and improve trade ties with the United States.
As for the Justice Department's ongoing investigation into whether Loral had two years earlier illegally assisted Chinese with missile technology, Berger was clear where career prosecutors stood.
``The criminal division of 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,'' the national security aide wrote Clinton six days before the waiver was signed.
One memo by Berger valued the Loral equipment in the transaction at $60 million to $65 million. A memo from a National Security Council staffer to Berger predicted penalties to Loral of $4 million to $6 million if the launch was delayed.
Separately, White House counsel Charles F.C. Ruff sent a memo to Clinton playing down Justice's concerns, suggesting they were only at the career staff level.
``The department had every opportunity to weigh in against the waiver at the highest levels and elected not to do so,'' Ruff wrote.