A MESSAGE FROM OUR FOUNDER AND CEO -
If there is any one man that the Chinese Army nuclear rocket forces should pin a medal on - it is Bill Clinton. In 1993, China depended on 1950s era missile technology that was failure prone and inaccurate even with nuclear warheads. They needed help. So they dangled a checkbook in front of our President.
Hughes CEO Michael Armstrong wrote President Clinton in 1993, threatening to pull his political and financial support if Clinton did not allow for space technology transfers to China. Armstrong listed numerous issues on which he had supported the president, noting that he needed Clinton's help on the export. Armstrong stated that Hughes would lose jobs in politically crucial California.
"This will be public and political shortly," wrote Armstrong.
In 1994, in return for Armstrong’s support Clinton approved a waiver for Hughes and later for satellite competitor Loral Space to transfer advanced satellite systems to China. Still, even with Clinton's signature, the cumbersome process of getting Defense Department and State Department approval was far too much for Armstrong.
According to a Sept. 22, 1995, State Department memorandum, Secretary Warren Christopher rejected plans to give the Commerce Department the authority to approve satellite exports after an interagency study noted that “significant” military and intelligence capabilities could be lost.
Armstrong knew the State Department would never allow his exports without detailed oversight and he intended to do something about it. In 1995, Armstrong wrote Clinton National Security Advisor Anthony Lake, seeking to transfer all satellite export authority from the State Department to the much more friendly and ill-equipped Commerce Department.
"The USG [U.S. government] does not require Congressional approval to remove commercial satellites from the United States Munitions List (USML), which is under State Department jurisdiction, and placing them on the Commerce Control List (CCL), which is under Commerce Department jurisdiction," wrote Armstrong.
"It is my understanding that State has resisted vigorously Commerce attempts to do just that. For the national good, this situation must change. A commercial communications satellite is not a defense item. State Department control of satellites is not required for national security. Continued State Department control is damaging to the U.S. satellite industry and is not warranted."
At the same time Loral leap-frogged over Armstrong and took the lead in seeking exports to China. In a September 1994 memo to Bill Clinton, Harold Ickes, then White House chief of staff, informed him that Loral CEO Bernard Schwartz could be used to raise campaign donations “in order to raise an additional $3,000,000 to permit the Democratic National Committee to produce and air generic TV/radio spots as soon as Congress adjourns.”
Ickes then urged Clinton to invite Schwartz to the White House “to impress [him] with the need to raise $3,000,000 within the next two weeks.” In another memo, Ickes informed Clinton that Schwartz “is prepared to do anything he can for the administration.”
Between October 1995 and March 1996, as Clinton mulled over whether to ignore the State, Justice, and Defense Departments’ objections against granting Loral waivers to export advanced technology to China, Loral Chairman Bernard Schwartz injected more than $150,000 into the DNC’s coffers.
However, something went horribly wrong. In February 1996, a Chinese Long March rocket carrying a Loral Intelsat satellite failed and crashed on lift-off. The Chinese intended to launch the Loral satellite into deep space as they had been paid to do by Mr. Schwartz.
However, when the satellites’ remains were recovered it was discovered that a vital computer control board was somehow missing from the space craft. Without the electronics on the missing board the satellite would have failed mysteriously in orbit. Yet, because of the rocket failure, the satellite was recovered nearly intact, except for the missing board.
The missing board from the Loral Intelsat satellite is no mystery. Chinese engineers had removed it and kept the board for examination. The stolen Loral electronics consisted of radiation hardened, encrypted, telemetry chips, stored in a hardened flight control box similar to those found on airliners.
Radiation hardened chips are useful for 3 things, space missions, atomic reactors and nuclear warfare. The fact that they were encryption control chips made it even more sensitive since they could be duplicated and used for military weapons such as nuclear tipped missiles.
While the Loral crash investigation was still ongoing, President Clinton quickly moved the oversight of satellite exports from the State and Defense Departments to the Commerce Department. In response, Armstrong and his counterparts wrote a thank-you letter to Clinton. In a May 3, 1996, letter signed by the CEOs of Hughes, Lockheed and Loral, the three executives expressed their thanks directly to Bill Clinton.
"In October of last year we wrote to you asking you to complete the transfer of responsibility for commercial satellite export licensing to the Department of Commerce. Your administration recently announced its intention to do just that."
"We greatly appreciate this action which demonstrates again your strong commitment to reforming the U.S. export control system," states a letter signed by Hughes CEO Armstrong, Lockheed CEO Norman Augustine and Loral CEO Bernard Schwartz.
With the stroke of a pen, Bill Clinton signed away decades of advanced US missile research and technology. While the Chinese were tearing apart the Loral satellites to obtain advanced electronics, Hughes also made significant contributions toward advancing the Chinese missile efforts.
According to the State Department, the most serious violations occurred when Hughes gave the Chinese Army classified information that supported its analyses of the investigation of the January 1995 failure of the launch of a Chinese rocket carrying the Hughes-manufactured ASTAR II commercial communications satellite.
On Jan. 26, 1995, approximately 52 seconds into flight, a Chinese LM-2E carrying the Hughes APSTAR II communications satellite failed. It was because of this failure that Hughes decided to pass secret missile technology to China. The joint Hughes and Chinese Army crash investigation teams discovered that the rockets’ nose cone had not been properly designed.
In response, Hughes engineers then passed to the Chinese all the information necessary to design a modern nose cone which could deploy a payload into space. Of course, that payload could be a civilian satellite or a nuclear warhead. The Hughes actions led to an investigation and national security violations charges were filed by the State Department.
“Respondents decided to form and direct a launch failure investigation beginning in January 1995 and continuing throughout much of that year. The investigation involved the formation of several groups of leading technical experts from China and the U.S., which throughout the investigation engaged in an extensive exchange of technical data and analysis, producing a wide range of unauthorized technology transfers,” noted the State Department charge document.
The national security charges caused a major upheaval at Hughes. Hughes not only lost its satellite and advanced US technology - it also lost its business. In the end, Hughes was forced to sell off its satellite division to Boeing. Boeing in turn agreed to fire most of the Hughes staff and pay a $32 million fine to the US government for the illegal transfers to avoid being banned from exports.
Loral too suffered from the extensive investigations into the massive transfers of advanced US technology to Chain. Loral was forced to sell off all of its defense and military divisions. The company eventually went bankrupt and then re-established itself as a satellite maker now using NON-US equipment.
However, the quid pro quo was complete and the Chinese Army went to work with US technology in hand. Improvements in rocket electronics, nose cone design and guidance system assembly obtained directly from Loral and Hughes were quickly applied to the force of nuclear tipped strategic missiles. The technology that Loral and Hughes engineers so eagerly provided was used to improve Chinese nuclear missile accuracy and reliability to near state of the art.
Previous flight test results indicated that almost half of the Chinese missile force would fail due to bad guidance and poor design. The remaining half was so inaccurate that they could miss their intended city targets by hundreds of miles.
Today, the Chinese missile force will perform flawlessly, dropping nuclear payloads within 100 yards of any target on Earth. The Chinese Army has a reliable global nuclear punch with powerful accuracy thanks to Bill Clinton.
CHARLES R. SMITH
CEO FOUNDER OF SOFTWAR INC.
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