Dispatches > The Buzz

Hughes clues

U.S. firm hit with record $32 million fine for military-technology sales to China

Issue: "Weapons of mass hysteria," March 15, 2003

When WORLD contacted Hughes Electronics in 1996 to ask about potentially problematic sales of technology to China, spokesman Alice Ducq would say only: "Hughes is very careful to obey the letter of the law." Last week the law finally caught up with Hughes. The aerospace giant was ordered to pay a record-setting $32 million fine for selling sensitive technology to China. The U.S. State Department charged Hughes with 123 violations of the Arms Export Control Act in selling satellite and rocketry know-how to China's military and space authorities in Beijing.

The penalty surpasses a $14 million record fine levied a year ago against Loral Space & Communications for similar export-control violations. Although the violations took place nearly 10 years ago, both cases were prosecuted under a Bush administration more committed than the Clinton White House to enforcing export controls on military know-how.

Hughes gave China sensitive rocket and satellite technology in detailed briefings, which followed satellite launches by China in 1992 and 1995 that exploded on takeoff. Under U.S. law, Hughes should have applied for licenses before passing on that kind of technical information. U.S. officials contended that the technology could be used to improve the launching capability of Chinese ballistic missiles. The satellite communications data could also be used to bolster the surveillance of Chinese citizens, the focus of a WORLD story in 1996 on Hughes' then uninvestigated dealings with China's Public Security Bureau.

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In 1999 the House Select Committee on U.S. National Security concluded that Hughes "deliberately acted with intent" in providing the data to China. In a March 5 statement, then chairman of the committee, Republican Christopher Cox, and ranking member, Democrat Norm Dicks, said: "This steep fine and sobering result is another reminder that effectively preventing weapons proliferation requires vigilant enforcement of export controls on military technology."

The Hughes penalty falls heavily on its new parent corporation, Boeing Satellite Systems. The fine must be paid over the next seven years. During that time, the group must also submit to unannounced onsite inspections by federal agents.


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