US Officials Denied Inspection But Approve Export Anyway!

In December 1997 the Clinton administration approved the export of more US built super computers to communist China. However, US Commerce Department officials working out of the Beijing embassy also failed to obtain a "Pre-License Check" or PLC through the Chinese government. US government officials sought permission to inspect Xian Jiatong University prior to the export of a high performance computer made by Digital Corp. (DEC). Commerce inspectors wanted to verify the Chinese site was not in violation of US law (eg.. PLA military base) but were denied access by the PRC government.

In a letter written to Liu Hu, Director General for Science and Technology of MOFTEC (Ministry of Foreign Trade & Economic Cooperation) US Commerce Department officials noted that they were not given permission to perform the license check. In fact, according to the letter, US officials performed the inspection without the assistance of the Chinese government and decided to allow the export.

  "We were disappointed at MOFTEC's decision not to allow an on-
   site end use check and refusal to permit an Embassy
   representative to travel to Xian Jiatong University at the
   university's invitation...  Because we were unable to work
   through MOFTEC, we gathered information on the end-user
   through other sources and have approved the license."

US officials also reminded the Chinese government of the new requirements that US representatives do a "post" export follow up inspection. However, Commerce officials were reduced to seeking "help" from the Chinese communist government in performing the post export inspections.

The letter was obtained by SOFTWAR under the Freedom of Information act (FOIA). The full text is as follows:

Bureau Of Export Administration
Washington, D.C. 20230

December 19, 1997
Liu Hu
Director General
for Science and Technology
Ministry of Foreign Trade & Economic Cooperation
No. 2, Dong Chang'an Avenue
Beijing 100731
People's Republic of China

Dear Director General Liu Hu:

We are writing regarding the difficulties we experienced in scheduling the pre-license check (PLC) that we brought to your attention at the JCCT, specifically EUC 970202 concerning the Boston Digital/Xian Jiatong University license application.

Because we were unable to work through MOFTEC, we gathered information on the end-user through other sources and have approved the license. However, we do not believe it is in MOFTEC's interest or in Commerce's interest that our respective governments should have to rely on unofficial channels for information. We wish to remind you of our understanding in the November 1983 US-China exchange of letters and paragraph 6 of the implementing "Letter of Understanding" which states:

     "From time-to-time establishing the bonafides of potential
      consignees may require commercial inquiries in the form
      of pre-license checks by the United States Foreign
      Commercial Service.  Such checks will be coordinated with
      the government of the People's Republic of China."

We expect to continue to request PLCs and coordinate our checks through MOFTEC, as agreed upon. In the interest of building mutual confidence, which is our goal, we would like your comments on where the process broke down and how we can avoid this in the future.

We understand that MOFTEC has concerns about the transparency of the U.S. system, just as we have concerns about the transparency of the Chinese system. The upcoming export control seminar will increase understanding of our countries' respective export control systems. We understand that our Embassy representative has spoken with MOFTEC about the seminar, and we look forward to receiving your comments on dates and proposed agenda items.

We also want to bring to your attention that our Congress has recently enacted a law which requires Commerce to conduct post shipment verification on all high performance computers over 2000 millions of theoretical operations per second (MTOPs) exported from the United States to approximately 50 countries around the world, including China. This is a sensitive area, and we seek your help on this issue.

Representatives from our two organizations, as well as from Commerce's Office of General Counsel will be in China in mid-January. We hope that they will be able to meet with you and your staff to discuss these issues to help further the strategic trade interests of both our countries.


Assistant Secretary
for Export Enforcement

Assistant Secretary
for Export Administration


Hoyt Zia was put under oath and on camera by Judicial Watch in October 1997. Mr. Zia is an ex-Motorola employee, a self described "close friend" of John Huang and Chief Legal Counsel for the Commerce Department Bureau of Export Affairs (BXA). Zia is charged with overseeing sensitive US exports such as secured satellite control systems, super computers and encrypted radios for China. Yet, despite his job at Commerce, Zia also managed to work at the DNC with John Huang, Melinda Yee and Charlie Trie during the 1996 CLINTON/GORE campaign.

One thing Zia admitted under oath was that he called John Huang when Huang was being sought by US Marshals. Huang was being sought for questioning by Federal authorities on the illegal campaign donations to the CLINTON/GORE campaign. Zia admitted he knew Huang was being sought but he never informed US law enforcement officials of his contacts with John Huang. Zia, the top Commerce official for high-tech exports, knew where Huang was hiding and did nothing. Zia abruptly ended his testimony after he admitted seeing Huang's testimony about himself (Zia), contradicting previous statements he made under oath. Zia has since refused to submit any further testimony but he still holds his key government position.

Bernie Schwartz is well known inside the White House. Mr. Schwartz has personally donated over $1,000,000 to the DNC since 1993. Mr. Schwartz is the Chairman of LORAL aerospace. Schwartz has sold satellites, and other aero-space technology to China. Schwartz flew with Ron Brown to China in late 1994 directly after making a $100,000 donation to the DNC. Schwartz donated another $100,000 to the DNC directly after returning from China. Today, Mr. Schwartz and his company are being investigated by a Federal Grand Jury for exporting advanced missile technology to China.

So, guess who flew to China along with Schwartz, the CEO of a company being investigated for selling advanced weapons technology to China? Below is the text of a letter written by Hoyt Zia. The letter was obtained from the US Commerce Dept. by SOFTWAR under the Freedom of Information Act (FOIA):

         MR. Benard L. Schwartz
         Loral Corporation
         600 Third Avenue
         New York, NY  10016

         Mr. Schwartz:

         It was a pleasure to meet you and to spend some time
         with you in Guangzhou and Hong Kong.  I know that your
         company enjoyed some significant successes on the trip:
         I personally enjoyed the chance to get to know you.

         Again, I hope that you found the overall mission
         worthwhile.  I look forward to re-establishing our
         acquaintance again soon, perhaps on another trade
         mission with Secretary Brown or in another venue.

Funny, Zia never mentioned he had traveled to China nor that he knew Benard Schwartz. There is also another curious thing about Zia flying with Schwartz to China. He is NOT listed on the official list of persons attending Brown's trade mission. Yet, here in his own words, is an admission that he did indeed travel to China with Benard Schwartz and Ron Brown.

Zia Sent To Beijing For Super Computer Export Talks

The US has many policemen. Some of them do not wear uniforms nor do they work for an agency known as law enforcement. Yet, they have arrest powers, can carry guns and have jurisdiction over laws which could bring criminal charges. One such post is the Bureau of Export Administration (BXA) at the Commerce Department. BXA oversees, investigates, approves and prosecutes export actions that may violate national security. BXA is a "trade cop" controlling the sale of advanced technology such as super-computers, encryption and communications.

The top "cop" post at BXA is the head legal Counsel. The head counsel is often the last stopping point before a "yea" or "nay" is given to US companies who wish to export controlled products. The BXA legal counsel determines if a "deal" violates the law. This legal counsel is suppose to know both the technology and the limits of the law because he is charged to enforce them.

The current top legal cop at BXA is Hoyt Zia and he is having a bit of a legal problem himself. Zia has commanded legal affairs at BXA since 1994. Yet, since 1994 BXA has quietly approved massive amounts of advanced US technology for export to China. For example, there is the export of dozens of US built super-computers for "commercial" purposes. Many of those computers are now inside People's Army research facilities developing more advanced nuclear weapons for communist China. Additional super computers were sold directly to a Russian nuclear weapons lab. The GAO report and the Russian Minatom Director have detailed these US built systems are NOW being used to design Russian nuclear weapons.

However, Mr. Zia also has some unusual connections with John Huang, and donations raised for the 96 Clinton/Gore campaign. In 1996 Zia would leave his BXA post at the end of each day and truck over to DNC headquarters. Zia worked closely with Huang on the Clinton re-election and they would often meet at DNC headquarters. In fact, Zia was so close to Huang that he had both the DNC office and home phone number of John Huang. Zia admitted that he called Huang several times from October of 96 through February of 97. Zia called Huang from his Maryland home and offered his assistance during Mr. Huang's "legal troubles". This would not be so bad except at the time of Zia's calls - John Huang was hiding from US Marshals.

SO, who did the Commerce Dept. pick to meet with Chinese officials to begin new negotiations to EXPORT MORE super computers? Which government official was chosen to travel to Beijing and start work on shipping more advanced technology to a nation already shown to divert said systems into MILITARY uses?

Answer: Hoyt Zia

Enclosed below is a document dated Jan. 16, 1998 from the latest Freedom Of Information (FOIA) request by SOFTWAR:

Embassy of the United States of America

January 16, 1998


FROM: Comoff Mark Bayuk

SUBJECT: BXA briefing on Export Control law changes
in regards to High Performance Computers (HPC)


Hoyt Zia, Commerce Chief Counsel for Export Administration Stephen Leacy, Senior Intl. Advisor Export Enforcement, BXA/EE Michael Hoffman, Director, Western Regional Office, BXA/EA Thomas Maertens, Deputy Director, Office of Arms Transfer and Export Controls, State


BXA briefing for Embassy officers on export controls

Time & Venue:

10:00 - 10:50 am, Tuesday, January 20
Embassy Chancery First Floor Conference Room


The BXA officials meet with MOFTEC Director General Liu Hu on Monday January 19 to discuss how to revitalize the USDOC dual-use prelicense check program, initiate a post-shipment check program for high performance computers (HPC's) and finalize details of the proposed March/April export control seminar in the US. They can brief on the outcome of the meeting and the story from Washington on the new requirements on HPC exports.

     NOTE: Officers can also attend the earlier BXA briefing for
     Principle Commercial Officers at 9:00 to 9:45 am in the FCS
     Conference room

Drafted by: Mbayuk

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