"For two years people have been looking for a magic
link that shows how the Chinese money affected policy.
All I see are a bunch of coincidences standing around
the same room trying to introduce themselves."

- James C. Mulvenon, RAND China specialist

When President Clinton imposed sanctions against China in August of 1993, several communications companies were immediately affected. Of these companies, two were industry giants: Loral Space & Communications and Hughes. The following information, comprised or quoted directly from the related sources, shows the sequence of events that surround the easing of restrictions on satellite transfers and launch regulations.

LORAL

• "In April 1993 Clinton waived the Tiananmen sanctions to allow Motorola to launch up to i2 satellites in China for its Iridium global wireless communications network. As part of that deal, the Chinese got help from U.S. companies in designing a ‘smart dispenser’ that enabled them for the first time to launch multiple satellites from a single rocket…the Iridium smart dispenser ‘could be developed into a credible PBV [post-boost vehicle) with a few relatively minor changes.’ Post- boost vehicles are used to deliver multiple nuclear warheads to separate orbits, so they can strike different targets independently. Multiple warhead technology was a key priority for the Commission of Science Technology and Industry for National Defense collectors, and was a capability the Chinese had previously lacked."1

• In May of 1993, Mr. Bernard Schwartz, CEO (Chief Executive Officer) of Loral, made his first unregulated "soft-money" donation to the DNC.2

• On August 24, 1993, President Clinton imposed sanctions against China for their proliferation of weapons to Pakistan. The sanctions prohibited the sale of satellites.3

• On January 7, 1994, "the Administration determined that the Commerce Department could approve licenses for three communications satellites for export to China."4

• In June of 1994, "Mr. Schwartz sent the DNC a $100,000 soft-money contribution, eight times the size of his first soft-money donation in 1993."5

• Several months later, Mr. Schwartz joined Ron Brown on a trade mission to China. "In a September 20th memo to the president, White House Deputy Chief of Staff, Harold Ickes, [advised] the president to call Mr. Schwartz and invite him and others to a White House breakfast ‘to impress them with the need to raise $3,000,000 within the next two weeks.’"6

• In 1995, "Mr. Schwartz [signed] a letter to the president advocating the shift of satellite-export responsibility from State to Commerce."7

• In October of 1995, Secretary Christopher announced the Comsat Technical Work Group’s decision not to agree to this shift.8

• "Between October 1995 and March 1996, while the President was considering reversing Mr. Christopher, Mr. Schwartz [donated] more than $150,000 to the Democratic Party."9

• On February 6, 1996, "President Clinton [signed] waivers for four satellite launches by Chinese rockets. "10

• On February 15, 1996, "one of China's rockets [crashed], destroying a $200 million Loral satellite."11 "Because of China's record of misstatements following past Long March failures, insurance industry executives who had insured the $85 million Loral satellite demanded that Western space officials investigate the cause of the mishap. Loral headed the panel, and its members included Hughes representatives."12

• In March of 1996, President Clinton overturned Comsat’s decision and allowed Commerce to regulate all sales and transfers of satellites.13

• Between April and December 1996, Mr. Schwartz donated "another $300,000, making him the Democrats' largest individual soft- money donor (more than $600,000) during the 1995-96 cycle."14

• "In May 1996, a Loral staff member on the panel faxed the Chinese a copy of its after-accident report. Loral superiors informed the State Department immediately about the disclosure, saying it was the result of a subordinate's inattention to security rules."15

• In May of 1997, the Pentagon issued "a classified report…analyzing the effect of the Loral-led review commission's unauthorized release to China of its report on the crash of the Chinese rocket. ‘United States national security has been harmed,’ the Pentagon concluded, by the improvement in China's missile capabilities that the review report made possible. The Justice Department and US Customs Service launch an investigation into the matter."16

• "While the investigation was ongoing, Mr. Schwartz donated another $366,000 to the DNC." 17 Coincidentally, this is the same amount the DNC was forced to return because John Chung had gathered it from "questionable sources."18

• Despite the investigation, in February of 1998, "Loral Vice President Thomas Ross…who served as a senior National Security Council official earlier in the Clinton administration," petitions the Administration for approval to launch another satellite.19

• According to Ross’ letter of February 13, 1998, "If a decision is not forthcoming in the next day or so we stand to lose the contract."20 He further warned that, "In fact, even if the decision is favorable, we will lose substantial amounts of money with each passing day."21

• "Five days later, Clinton granted his approval, despite what Berger advised him were Justice concerns that the move ‘could have a significant adverse impact’ on its ongoing criminal investigation."22 The President, citing "national interest," gives Loral permission to "officially transfer" the same technology presumably transferred in 1996, thereby undercutting the grand jury’s investigation.23

• From January to March of 1998, "Mr. Schwartz [sent] the DNC another $55,000."24

HUGHES

• On August 24, 1993, President Clinton imposed sanctions against China for their proliferation of weapons to Pakistan. The sanctions prohibited the sale of satellites.25

• C. Michael Armstrong, CEO of Hughes, "hired Hill & Knowlton, the public relations firm, which worked Congress, the White House and the DNC."26 In October of 1993, Armstrong met with President Clinton after issuing veiled threats in a letter strongly criticizing Clinton’s policy.27

• On January 7, 1994, "the Administration determined that the Commerce Department could approve licenses for three communications satellites for export to China."28

• Armstrong was later appointed Chairman of the "President's Export Council, a presidential advisory group."29

• In 1994, Hughes hired the son of Chinese General Shen Rongjun. "Mr. Shen was hired…by Hughes for his computer expertise, though the company was also aware of his family ties before he joined the company."30

• General Shen Rongjun was a former senior official of COSTIND, and oversaw China’s satellite and rocket launching programs.31 "General Shen [has] publicly promoted satellite technology as crucial to the future development of China's military capabilities."32 General Rongjun and his son would eventually both be involved, either directly or indirectly, on the Asia-Pacific Mobile Telecommunications (APMT) project in 1996.33

• In 1995, a "Chinese Long March rocket exploded only seconds after liftoff."34 "Chinese officials repeatedly blamed the Hughes satellite, saying it had exploded and torn off the top of the rocket. Western space industry executives said that was preposterous, and blamed problems with the Chinese rocket. Amid these bitter exchanges, Hughes received Commerce Department approval to discuss its theory of the mishap with the Chinese -- but only vaguely, so as not to disclose rocketry data that could assist Beijing in developing military missiles. Hughes officials said their conversations with the Chinese were very general."35 Subsequent investigations by Congressional Representatives conclude that sensitive information was "inadvertently" transferred to China.

• "In 1995 Armstrong hired Loretta Dunn, then a top aide to Commerce Secretary Ronald H. Brown, as Hughes's vice president for trade. She lobbied numerous former colleagues in the administration and is credited with helping arrange Clinton's March 1996 decision shifting regulatory authority over Chinese satellite deals to her former agency."36

• Hughes "won Commerce's permission to communicate more freely with Chinese space officials on technical data in many launches. Moreover, the firm got Commerce to loosen requirements [for] Pentagon officials [to] monitor all technical discussions between U.S. and Chinese space engineers. Hughes said it simply sought to avoid paying for monitors. These Commerce decisions led to years of confusion about which agency regulated which phases of U.S. launches in China. While other U.S. firms, such as Loral and Lockheed Martin Corp., had Pentagon monitors present for discussions with the Chinese, Hughes did not, and three of its launches had no Defense Department monitors in 1995-97."37

• On June 23, 1996, the President granted a special waiver for Hughes to sell a satellite to APMT. "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."38

• "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."39 "Both men have senior posts with the China Satellite Launch and Tracking Control Corporation, the unit of COSTIND overseen by General Shen. American intelligence reports say Mr. Feng and Mr. Li are top military officers, according to Administration officials."40

• According to Hughes representatives, they were "`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."41

• When the Justice Department began a review of the Loral failure, they expanded it to include the Hughes incident, as well.42 During the Fall, 1998 review of the matter, the CIA reportedly provided Hughes with information about the investigation.43 "Sources said the matter began in 1998 when a CIA analyst specializing in Chinese technology, Ronald Pandolfi, was called to the Senate committee and told staff members that he had concluded in 1995 that Hughes had been too aggressive in marketing high-technology equipment in China."44

• "At the time, Pandolfi conducted interviews with Hughes executives about their work in China, causing Hughes to complain angrily to the CIA that [Pandolfi] was operating outside of customary channels. The CIA office that regularly deals with Hughes reprimanded Pandolfi, who, after being summoned by the committee, in September laid out a set of accusations against the firm."45

• "Aware of Pandolfi's views, the CIA gave Hughes a heads-up about his discussion with the committee and offered to supply the panel with the names of Hughes executives who might explain the disagreement."46

• In 1999, the Clinton administration decided to reject the APMT sale. "The decision came after the Defense and State Departments objected to allowing China to launch the satellite. Overruling the Commerce Department, which had favored the sale, the State and Defense officials concluded that the technology to place the satellite in orbit would help the Chinese military make its intercontinental ballistic missile fleet more accurate."47

CHUNG

• Johnny Chung "disclosed that he received more than $2 million between 1994 and 1996 from various Chinese investors. He said he used less than 20 percent of the funds for political donations, which he considered part of his business expenses."48 Chung "has told Justice Department investigators that top Democratic National Committee officials knowingly solicited and accepted improper donations from him."49

• "Chung offered to make a $50,000 contribution to the DNC if he could bring five Chinese businessmen to a March 11, 1995, presidential radio address. Richard Sullivan, former DNC finance director, has testified that he rejected the offer. Instead, Chung sought help from aides to Hillary Rodham Clinton in gaining access to the radio address."50 "The DNC eventually accepted the money."51

• Chung "claimed Sullivan personally asked him for a $125,000 donation in April 1995. Sullivan took the money despite having previously voiced suspicions that Chung was acting as a conduit for illegal contributions from Chinese business executives, they added. Sullivan's lawyer said he denies Chung's account of their dealings."52

• Chung also "described his dealings with Charles Parish, a then-senior diplomat in Beijing who helped him get visas for dozens of Chinese. In turn, Chung said, he did various favors for Parish, including taking him to a 1995 DNC fundraiser in Los Angeles featuring Clinton, and paying the tuition for seven students."53

• Chung said he was "asked by an executive of a Chinese beer company ’to give a shopping bag of money' [to Parish] in an apparent exchange for visas. Parish, who was removed from his post in Beijing in 1996, remains under investigation by the Justice Department. Parish has denied this allegation."54

• Chung said that "DNC and Clinton-Gore officials were aware that he was bringing foreign guests to a September 1995 Los Angeles fund-raising dinner."55 "He arrived with an entourage of 20 people. At the event, campaign officials rejected Chung's $20,000 check because contributions to the dinner were subject to a legal limit of $1,000 per person. The following day Chung had 20 friends and employees write individual $1,000 checks, which were accepted by the campaign. Chung later reimbursed the check-writers."56 "Chung claims it was transparent on that occasion, and virtually every other, that he was producing contributions on behalf of foreign nationals who could not legally give to political campaigns."57

• On July 21, 1996, "Liu Chao Ying and Chung attended a Los Angeles fund-raiser where Liu was photographed with Clinton, as is common practice with guests at such events."58

• Chung testified that on August 9, 1996, "he set up a holding company, Marswell Investments, with Liu Chao Ying, an officer in China's People's Liberation Army and executive with China Aerospace, Beijing's state-run rocket manufacturing company."59 Liu "is the daughter of a powerful, now-retired general in the Chinese army, Liu Huaqing, and exercised considerable influence herself as an executive of the state-owned company that sells and launches rockets and satellites."60 "Liu promised to put up $300,000, but instead proceeded to introduce him to [General] Ji [Shengde], who offered a cryptic deal during a meeting in China."61

• Chung said he was provided the $300,000 on the behalf of General Ji Shengde, the head of the Chinese military intelligence.62 "’We really like your president,’ Ji said, according to Chung's recollection. ‘I will give you $300,000 U.S. dollars. . . . You can give it to your president and [the] Democrat Party.’"63 Chung said Liu told him that the Beijing government was working with other politically connected individuals to advance China's interests in the United States. Congressional investigators have concluded that between $20,000 and $35,000 of Chung's contributions can be traced to the general's money.64

• Chung made more than $366,000 in contributions to Democratic coffers before the 1996 election and visited the White House at least 49 times (21 times on the authority of the First Lady, herself), often in the company of the Chinese businessmen who were his clients and partners.65

• "Speaking of those he escorted into Washington's inner sanctum, Chung said they wanted ‘what most Americans want from our system--influence and the ability to develop relationships with important people.’ The photographs they had taken with the president and first lady were worth ‘gold,’ he said, because ‘in China such photographs project a great sense of importance.’"66

• Chung said DNC leaders were ``fully aware that I was doing a lot of business and cultivating friendships with people from the People's Republic of China.''67 He also testified "that he encouraged party officials to help him gain access to Clinton because it would help his business."68 ``I tell them the more money I can make doing business with these Chinese people, the more money I can donate."69

• "In March of 1998, he pleaded guilty to election law violations and began cooperating with the Justice Department's investigation into alleged 1996 fund-raising irregularities. Chung could have been imprisoned for 37 years and fined $1.45 million. He was sentenced to five years probation and 3,000 hours of community service, which was noted during the hearing as a sentence the government asks for witnesses who have been cooperative. "70

• "Ji's shadow reemerged two years later after Chung had become the only major player to cooperate with the campaign finance investigation. According to Chung, Robert Luu, a California businessman, approached him while he was being debriefed by the FBI after his guilty plea and told him, ‘If you keep your mouth shut, you and your family will be safe.’"71

• "In conversations monitored by the FBI, Luu suggested that he was in touch with the General and could produce money and an attorney if Chung kept quiet."72

• "The Chinese government became so concerned that its campaign contribution scheme would be exposed that it dispatched an undercover operative to Los Angeles last year to threaten Johnny Chung and his family with physical harm if Chung cooperated with federal prosecutors. The FBI wired Chung for the meetings with the Chinese agent and eventually struck a deal with Chung allowing him to testify publicly this May before the House Committee on Government Reform. Transcripts of Chung's secret meetings with the Chinese agent, recently posted on the Internet, show the extraordinary efforts by the Chinese government to buy Chung's silence. The Chinese agent, Robert Luu, specifically told Chung never to reveal to U.S. investigators that two U.S. companies selling China critical technology - Hughes Electronics and Loral Space Systems - were tied to Liu Chaoying, who was Chung's link back to Chinese military intelligence. In one taped session, aired on the Fox News Network on May 24, the two discussed a cover-up scheme. ‘So blame it on the Princelings,' Chung said, referring to the sons and daughters of top Chinese Communist Party officials. Replied Luu: ‘Yes. Chairman Jiang agreed to handle it like this. The president over here also agreed.’"73

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