WASHINGTON-Hughes Electronics Co., under fire in Congress for heavy-handed lobbying on satellite exports to China, again is pushing the Clinton administration to relicense a $500 million Asia-Pacific Mobile Telecommunications satellite system to the Communist giant.

“If this contract were to be terminated for cause at this point, Hughes could be exposed to substantial financial risk, including having to absorb approximately $100 million in expended production costs and contractual penalties,” said Hughes Vice Chairman Steven Dorfman in a July 13 letter to John Holum, acting undersecretary of State for international security.

Holum has testified before Congress that the United States retains strong export controls on sensitive American high technology. That view is not shared by other intelligence and national security experts in the U.S. government.

Dorfman pressed Holum for an answer by Aug. 15 on relicensing APMT, largely Chinese government held in conjunction with the Riady family of Indonesia.

At the end of his two-page letter, which Congress released last week, Dorfman made note of a potential loss of approximately 1,000 jobs in electoral vote-rich California if the APMT contract is canceled.

Last week, members of the Senate Government Affairs subcommittee on international security, blasted former Hughes chairman C. Michael Armstrong, now head of AT&T Corp., for his aggressive and abrasive lobbying of President Clinton and his aides on satellite exports.

That lobbying helped persuade the White House to move satellite export licensing from State to Commerce and got Armstrong appointed chairman of the president’s export council.

“American corporations should not serve as mini State Departments,” said Sen. Fred Thompson (R-Tenn.), chairman of the Senate Governmental Affairs Committee. Thompson got Armstrong to admit he acted as a go-between for the Clinton administration in negotiating with Communist China on behalf of Hughes.

Armstrong and Dorfman told lawmakers that Hughes did not transfer sensitive technology to China, yet both agreed that stronger monitoring of China satellite launches would be appropriate. Dorfman said Hughes would pay for U.S. monitoring of its launches.

Officials at the Commerce Department and State Department reportedly are reconsidering initial approval of APMT because of new concerns that sophisticated satellite technology transfers could be diverted to the Chinese military to aide their eavesdropping and nuclear missile capabilities.

In particular, U.S. officials are focussed on Hughes’ Shen Jun, son of Chinese General Shen Rongjun and Hughes’ liaison with China on the APMT contract. General Shen oversees China’s military satellite operations.

“The [APMT] license is in the inter-governmental agency review process,” said a Commerce Department official. The State Department could not be reached for comment.

Hughes is contemplating the sale of a similar mobile satellite system to the Middle East. The Asia-Pacific mobile satellite system will serve China and 21 other Asian countries.

Congress and the Justice Department are investigating whether Chinese launching of satellites built by Hughes and Loral Corp. improved China’s development of nuclear missile guidance systems and compromised U.S. national security in the process.

China has sold missiles to rogue states, like Iran and Pakistan, and has nuclear missiles pointed at the United States. The United States, for its part, has nuclear missiles pointed China’s way.

Some believe China is partly to blame for new nuclear proliferation in Asia.

Congressional and Justice investigators also are examining whether Democratic campaign contributions influenced U.S. technology transfers to China. Loral Chairman Bernard Schwartz has been the single largest Democratic contributor in the 1990s.

“We still have a problem with this administration on export licensing,” said Sen. Thad Cochran (R-Miss.), chairman of the Senate Governmental Affairs subcommittee on international security.

There is U.S. concern, too, that Motorola Inc.’s work with China to launch Iridium satellites may have contributed to a situation in which China no longer experiences the satellite launch failures it did prior to the Clinton administration’s 1996 shift of satellite export licensing jurisdiction from the State Department to the Commerce Department.

Some in U.S. intelligence and military circles believe the capability to accurately direct a satellite into orbit can be converted to deploy nuclear warheads from missiles.

The GOP-led Congress is considering legislation to return satellite export licensing back to the State Department. The Clinton White House and American satellite manufacturers are opposed to the change.

Some lawmakers have called on the U.S. government to offer competitive satellite launch facilities so American satellite suppliers are not forced to go to China and Russia for launches.

Thompson and others say there is evidence the Chinese government tried to influence U.S. elections in 1996 through illegal campaign contributions to Democrats. Attorney General Janet Reno, despite forceful recommendations from the FBI and her top campaign finance investigator to appoint an independent counsel to sort it all out, steadfastly refuses to do so.

Republicans, however, have threatened to take Reno to court to force her to appoint a special prosecutor to investigate Democratic campaign finance irregularities in the 1996 election cycle.


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