US firms 'aided China missile effort'

" Hughes and Boeing have both failed to recognise the seriousness of the violations "
Lou Fintor
State Department

The State Department accuses Hughes Electronics and Boeing Satellite Systems of 123 violations of US export laws, in connection with the transfer of satellite and rocket data to Beijing.

If a full inquiry finds them guilty, Hughes and Boeing could be fined up to $60m - and barred for three years from selling controlled technologies overseas.

The two companies deny any wrongdoing.

The charges relate to technical information Hughes officials are alleged to have given China after Chinese rocket launches carrying US satellites failed in 1995 and 1996.

Boeing was cited because in 2000 it acquired Hughes Space and Communications - then a division of Hughes Electronics.

Previous settlement

"The number and substance of charges reflect the seriousness of the violations," State Department spokesman Lou Fintor said on Wednesday.

"There are many similarities between a space launch vehicle and an intercontinental ballistic missile."

A year ago another aerospace company, Loral Space & Communications, reached a settlement with the State Department over similar charges.

Loral agreed to pay $20 million in fines, but neither admitted nor denied wrongdoing.

"The department has had several rounds of discussion with Hughes and Boeing to explore a resolution similar to the one with Loral," Mr Fintor said.

"We can note, however, that unlike Loral, Hughes and Boeing have both failed to recognise the seriousness of the violations and have been unprepared to take steps to resolve the matter," he added.

Studies

But a Hughes spokesman, Richard Dore, said the company broke no laws.

"We did not do anything to assist the Chinese," he said.

Mr Dore said Hughes complied with the regulations of the Commerce Department, which oversaw technology exports at the time.

He said discussions with the State Department were continuing.

American companies began using Chinese rockets in the 1980s to launch satellites.

After several failed launches, Hughes and Loral participated in studies examining possible causes of the failures.

Congressional investigations in the 1990s found that China had gained information on missiles from those reviews.