Communications Probe Ends With FinePETE YOST , Associated Press
Jan. 10, 2002 5:24 AM ET
WASHINGTON (AP) _ A long-running investigation into Loral Space & Communications' transfer of highly sensitive information to China is at an end, with the company paying a $14 million civil fine.
The settlement comes four years after Justice Department lawyers expressed concern that their probe was being jeopardized by the Clinton White House. Bernard Schwartz, Loral's chairman and CEO, donated nearly $1 million to Democrats from 1995 to 1998.
At issue in a Justice Department probe was whether Loral illegally helped the Chinese in 1996 by offering technical help after a rocket carrying a Loral satellite exploded.
The Pentagon concluded in a report that sensitive technology involving missiles was transferred to the Chinese. Loral denied its assistance helped China militarily.
In a statement Wednesday, Schwartz said Loral ``made an immediate and voluntary disclosure to the State Department'' when the company learned an employee had mistakenly sent a report on the rocket failure to the Chinese.
``Loral accepts full responsibility for the matter and expresses regret for its failure to obtain appropriate State Department approval,'' Schwartz said. The company will pay the fine to the State Department.
The company also said it has strengthened its export compliance program with changes that will cost at least $6 million.
Schwartz said the company has instituted an extensive new training program, added staff and greatly improved oversight of export control.
In 1998, during the investigation, Justice Department attorneys cautioned that the probe could be harmed if the Clinton administration cleared the way for another Loral satellite to be launched by China. President Clinton approved the deal.
Before Clinton's decision, then-national security adviser Sandy Berger wrote the president that ``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. On fairness grounds, we believe it is inappropriate to penalize (Loral) before they have even been charged with any crime.''
In a 1998 memo marked ``the president has seen,'' White House aide Phil Caplan wrote that the ``Department of Justice believes that, if the matter ever reaches a trial, a jury would likely not convict'' the company ``if the jury were to learn that a waiver was issued.''
Clinton said his decision ``was the right one,'' adding that ``I can assure you it was handled in the routine course of business.''
On the Net: State Department: http://www.state.gov/
Loral Space & Communications: http://www.loral.com/