United States:  China Denies Getting Missile Technology From Hughes

China rejected U.S. allegations today that U.S. military contractor Hughes Electronics provided it with illegal technology in the mid-1990s, Agence France-Presse reported (see GSN, Jan. 3).

“It is unnecessary and impossible for the Chinese side to gain satellite rocket and missile technology from U.S. companies,” said government spokeswoman Zhang Qiyue (Agence France-Presse, Jan. 7).

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United States:  Boeing Says State Department Charges Are Misdirected

Responding to U.S. State Department charges, Boeing said yesterday it is not responsible for misconduct by its California-based satellite division that took place in the mid-1990s, before Boeing purchased the satellite operations (see GSN, Jan 2).

Boeing acquired the satellite division in 2000 from Hughes Electronics, a unit of General Motors, the Los Angeles Times reported today.

“It is important to remember that these charges relate to events that occurred in the 1990s when Hughes Space and Communications Co. was under different management and before Boeing acquired the satellite business,” according to Randy Brinkley, president of Boeing Satellite Systems.

As part of the purchase, Hughes “retained responsibility for resolving these China matters and for paying any resulting fines and penalties,” Boeing said (Peter Pae, Los Angeles Times, Jan. 3).

Boeing also said it had spent millions of dollars to improve operations at the satellite division since the acquisition.

“Boeing Satellite Systems is now at what we believe to be the cutting edge of export compliance systems among aerospace companies,” Brinkley said (Agence France-Presse, Jan. 3).

State Department spokesman Richard Boucher disagreed with Boeing’s assertion that it held no responsibility. “Boeing bought the company from Hughes after all this had happened, but they’re still the responsible party to respond to these claims,” Boucher said.

The two companies have 30 days to respond to the State Department’s 34-page charging letter, which accuses the satellite division of violating 123 military export rules by transferring rocket technology to China, Boucher said.  The companies can request a hearing on the charges, which come in response to violations of the Arms Export Control Act and the International Traffic in Arms Regulations, according to Boucher.

“Hughes Electronics Corporation and Boeing Satellite Systems took numerous actions in violation of established export controls and prohibitions and restrictions and of the bilateral agreement between the United States and China,” Boucher said.  “The number and the substance of the charges reflect the seriousness of the violations,” he added (Federal News Service transcript, Jan. 2).

Settlement Near?

Several analysts said the charging letter may only be a first step to a settlement.  Loral Space and Communications settled a similar issue with the State Department early last year (see GSN, Jan. 10, 2002); Boeing and Hughes should be able to work out a deal as well, according to Paul Nisbet, an analyst at JSA Research.

“If they can work it out with Loral, they can certainly do so with Boeing,” Nisbet said (Melissa Allison, Chicago Tribune, Jan. 3).

“I see it as a step toward settling the whole thing,” said Marshall Kaplan, director of space programs for the research company Strategic Insight (Pae, Los Angeles Times).

Although the State Department issued a charging letter against Loral, actual charges were never filed and U.S. officials have complimented the company on its cooperation.

If a settlement is not reached, the fine would not be too much trouble for Boeing or Hughes to handle, according to Nisbet.

“In the scheme of things, it’s just a modest hiccup that’s not of much concern to investors,” he said (Allison, Chicago Tribune).

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United States:  U.S. Firms Faces Charges of Aiding Chinese Missile Program

The U.S. State Department has charged two U.S. aerospace companies — Hughes Electronics Corp. and Boeing Satellite Systems Inc. — with illegally providing China with space-launch technologies that could be used for Beijing’s ICBM program, the Associated Press reported today.

In a letter filed last week, State charged the two companies with 123 violations of the Arms Control Export Act and the International Traffic in Arms Regulations for giving technical data to China after failed launches of Chinese space-launch vehicles carrying U.S. satellites in 1995 and 1996, AP reported.  If the violations are upheld, the companies would face fines of $500,000 per charge and export restrictions.

“The number and substance of charges reflect the seriousness of the violations,” said State spokesman Lou Fintor.  “There are many similarities between a space launch vehicle and an intercontinental ballistic missile,” he added (Associated Press/Newsday, Jan. 2).

Hughes Electronics, which Boeing purchased in 2000, has denied any wrongdoing, according to the Washington Post.  Both companies have said State is wrong to declare their activities in China improper because their activities were covered by looser Commerce Department regulations at the time. 

“We don’t believe we’ve done anything wrong,” said company spokesman Robert Marsocci.  “We’re in negotiations with the State Department, and we’ll be reviewing our options,” he added.

State, however, has said that more stringent export control laws were still in place, and that the companies violated them, the Post reported.  

The Justice Department spent years investigating whether the two companies, along with Loral Space and Communications, which was involved in similar activity in China, had committed any criminal wrongdoing, the Post reported.  Several months ago, U.S. prosecutors told the three companies that they would not be filing charges.

The administrative charges filed against Hughes Electronics and Boeing are considered to be very rare, U.S. officials said. The charges reflect officials’ anger that the two companies have fought the charges and refused to admit their activity in China was wrong, the officials said. 

U.S. officials have commended Loral for acknowledging its past violations and for implementing guidelines to prevent recurrences (see GSN, Jan. 10, 2002).  Hughes Electronics and Boeing have not received such praise, according to the Post.

“The department has had several rounds of discussion with Hughes and Boeing to explore a resolution similar to the one with Loral,” said State spokesman Jay Greer.  “We can note that unlike Loral, Hughes and Boeing have both failed to recognize the seriousness of the violations and have been unprepared to take steps to resolve the matter, or to ensure no recurrence of violations in the future,” he added (John Mintz, Washington Post, Jan. 1).

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India:  Agni 1 Might Become Operational This Year, Official Says

India’s short-range Agni 1 ballistic missile might be operational by the end of the year, V.K. Aatre, chief of the Indian Defense Research and Development Organization said Tuesday (see GSN, July 26, 2002).  India has planned several tests of the Agni system in the next few weeks, he said.  After additional testing, the BrahMos supersonic cruise missile might also be operational by the end of the year, Aatre said. 

Two other Indian missile systems — the Akash surface-to-air missile and the Nag anti-tank guided missile — are expected to be ready for user tests by the end of 2003, Aatre said (Economic Times, Jan. 1). 

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China:  Officials Plan Manned Space Flight in 2003

China successfully launched its Shenzhou 4 spacecraft Monday in what is expected to be the final version of the space vehicle before a manned mission is launched later this year, Reuters reported today (see GSN, March 26, 2002).

The first Chinese manned spaceship is currently being built and tested, and “represents the country’s most sophisticated and fullest preparation so far to realize the nation’s long-cherished dream of manned space flight,” according to Yuan Jie, director of the Shanghai aerospace center.

“What they’ve said in the past was that the fifth Shenzhou would be the planned vehicle for their first manned attempt,” said a Western diplomat with knowledge of the Chinese space efforts.

Beginning in 1999, each of the four Shenzhou spacecraft have launched successfully and were carried on the Long March 2F rocket, Reuters reported.  The launches take place in the northwestern province of Gansu.

In general, however, details on the Chinese program are limited and the budget is a secret.  The program is closely affiliated with the Chinese military, according to Reuters.

“You have military culture involved, which is reflexively secretive,” the diplomat said (Scott Hillis, Reuters, Jan. 2).

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